IRS and Tax Prep Leaders Meet to Brainstorm Future Ways to Address Identity Theft

The IRS and leaders from the private tax preparation industry are already strategizing for how to curb stolen tax refund identity theft in the next filing season and beyond, said IRS Commissioner John Koskinen during a March 19 press briefing in Washington, D.C. The IRS and private industry leaders met for two hours prior to the briefing to share open, candid discussion ideas for combatting identity theft and presenting a “united front to create powerful deterrent effect on fraud,” Koskinen said.

During the meeting, participants agreed to set up three working groups with the help of tax administrators from all 50 states and the District of Columbia. The three working groups would each focus on a different aspect of the fight against identity theft. The first will address overall strategies for fraud deduction, improved authentication and additional security safeguards. The second working group will be comprised mainly of technology experts from the private sector tasked with exchanging information and observations on tax fraud schemes and activities they encounter. The third working group will focus on how to maximize information sharing between the IRS and the private sector.

Koskinen stated that private industry leaders had urged the IRS to host this meeting, and stressed that new ideas for addressing identity theft in the 2016 filing season must be tested soon. “The reality of the technology and complications means that anything for next filing season must be tested this summer,” he said. The IRS and private industry leaders hoped to see begin testing improvements in authentication, fraud prevention, scheme analysis and information sharing this summer, he added.

“It’s realistic for us to become, as a group, even more effective at identifying schemes and frauds and defeating them. The amount of identity theft should go down; and the amount of improper refunds should go down,” Koskinen said. “I would be disappointed if we don’t see significant progress.”

In regards to the current filing season, Koskinen praised the IRS for the enormous progress it had made during the past four years in its response to victims of identity theft. He said that the IRS’s response time use to be one year and was now less than 120 days. The IRS’s ongoing goal is to decrease this response time further, he said.

The IRS has also made progress in tax fraud prevention, according to Koskinen. For example, if the IRS suspects a tax return of not being filed by the true taxpayer, it will send a letter to the taxpayer asking for more information, rather than issue a potentially fraudulent tax refund. He said he had received anecdotal evidence that some taxpayers who had received these letters responded to the IRS by saying that had not yet filed a return.

However, Koskinen expressed some concern that the recent cuts to the IRS’s budget would hinder some of its future progress. For example, the IRS was currently forced to make difficult choices about its development of new information technology systems.

By Jennifer Cordaro, Wolters Kluwer News Staff

 

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Wolters Kluwer Tax and Accounting

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