IRS Announces New Joint Effort to Protect Taxpayers From Identity Theft

The International Revenue Service is joining forces with state tax officials and representatives of tax preparation firms to combat a new wave of tax-refund theft and identity fraud. This collaborative effort comes as a result of the agency’s recent announcement that hackers had accessed information for more than 100,000 taxpayers who filed their 2014 returns.

The agency faced similar data breaches when a reported $5.8 billion was lost to tax identity theft in 2013 according to the U.S. Government Accountability Office. Thousands of taxpayers continued to be victimized when IRS impersonators stole an estimated $15.5 million earlier this year.

IRS Commissioner John Koskinen said the agency is not sure of how much money has been stolen in fraudulent tax refunds but that the increased cooperative measures will help put an end to cybercrimes. “We all understood that no single organization can go it alone,” Koskinen told reporters at a recent press conference. “We have come to realize we are now dealing with a much more sophisticated enemy than in the past.”

Existing procedures identified more than 37,000 suspicious filings in Utah, a large jump from the 1,200 found in 2014. The IRS has managed to stop three million bogus filings this year and the new protocol is predicted to weed out more.

The joint efforts will put financial-products firms and state tax officials on high alert for cybercriminal activity said Koskinen. “This agreement represents a new era of cooperation and collaboration among the IRS, states and the electronic tax industry that will help combat identity theft and protect taxpayers against tax refund fraud.”

Currently the IRS has issued special ID numbers to 1.5 million households that have been targeted by cybercriminals. The ID numbers are one of the new protocols being used to enhance cyber-security. The agency is modeling their security framework after that of the National Institute of Standards and Technology.

The IRS has outlined preventative measures that concerned taxpayers can take including:

• Multifactor authentication – taxpayers are encouraged to change their passwords often, especially on finance-related websites.
• Modulate censorship – guard personal information such as financial postings and data online should be shared with care.
• Apply for an Identity Protection PIN – to apply as a potential victim, check Box 2 of Form 14039, “Identity Theft Affidavit.”

Other procedures being taken include an earlier filing deadline that would require employers to submit W2 and other related forms by Jan. 31 so that the agency can detect fraudsters earlier. So far at least 12 states have signed on for this change according to the Federation of Tax Administrators.

“We’ve made tremendous progress, and we will continue these efforts,” stated Koskinen. “Taxpayers filing their tax returns next filing season should have a safer and more secure experience.”