Tax Strategies & Credits

Tax industry and IRS Parter Up to Fight Refund Identity Fraud

by
Lee Reams II
on
10/18/2015
Tax industry and IRS Parter Up to Fight Refund Identity Fraud

Under a new agreement, the IRS is partnering up with tax preparation firms, state tax administrators and tax financial product processors to combat identity theft refund fraud. This agreement rings in a whole new era of collaboration and cooperation between the tax industry and government. According to IRS Commissioner Josh Koskinen, “Taxpayers filing their tax returns next season should have a more secure and safe experience.”

The Project

The project established three specialized working groups: Authentication, Information Sharing and Strategic Thread Assessment and Response. The working groups include members from the IRS, states and tax industry who are all focused on developing strategies to increase detection and prevention of refund fraud. Since the launch of the project in March 2015, the IRS has also added new initiatives:

  • Ramping up Taxpayer Authentication – Teams have discovered new data that can be shared when taxpayers file to identify tax refund theft. This data includes improper use of an Internet protocol number, reviewing the return's origin on the computer device identification and capturing metadata in the transaction. All of this data will be submitted to the IRS in 2016.
  • Zeroing in on Identifying Fraud – For the first time, the whole tax industry will be sharing aggregated analytical data about its filings with the IRS. With the expanded sharing of aggregated data, fraud will be easier to identify.
  • Enhancing the Access of Information – The teams of the project will be establishing a formal Refund Information Sharing and Assessment Center. Though this center, information between the private and public sectors will be shared and more efficient. With better information, law enforcement will have the information needed to investigate and prosecute fraudulent thieves.
  • Participating in Cybersecurity Framework – While many in the tax industry already operate under the National Institute of Standards and Technology cybersecurity framework, the IRS has encouraged others to align their computer practices under this standard.
  • Increasing Taxpayer Awareness – All of the parties involved in this project have agreed to increase their efforts in communication to better inform taxpayers about how to protect their confidential personal, financial and tax information in order to decrease the risk of identity theft and tax fraud.

An Ongoing Process

While this new collaborative approach of sharing information is expected to reduce tax return fraud, all of the parties realize that their methods and strategies of improving defensive threats to the tax system and taxpayers is an ongoing battle. Cybercriminals are always on the hunt for new ways to successfully breach systems without detection. And this new collaborative approach couldn't have been timelier. Just several weeks ago, the IRS has a massive security breach that resulted in cyber thieves gaining access to about 100,000 taxpayers' personal information. According to the Associated Press, the cyber thieves stole approximately $39 million.

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Lee Reams II

Lee Reams II

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I am a tax and business news junkie who has spent the last 20 years developing and executing "best in class" word-of-mouth marketing campaigns for tax and accounting professionals. With TaxBuzz and CountingWorks we have taken that same commitment to quality content directly to the consumer. Keeping you up-to-date with the latest tax law changes, business growth tips and planning strategies to help you reach your best financial outcome.

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