New Agreement Increases Fraud Protection

IRS Fraud

New Agreement Increases Fraud Protection

As a result of a Security Summit that was convened in March, the IRS has announced a comprehensive new agreement addressing the issues of tax fraud and identity theft. The agreement, which has been a work-in-progress over the past twelve weeks, comes as a result of the combined efforts of federal and state tax administrators, tax preparers and tax and payroll software firms. It includes new steps to validate taxpayer identity, increase information sharing between government and the tax industry and identify fraud schemes. According to Tax Commissioner John Koskinen, the agreement “represents a new era of cooperation between the IRS, states and the electronic tax industry.”

Over the past twelve weeks, the members of the Security Summit have focused their efforts on several new initiatives, all aimed at detecting and preventing tax refund fraud. The major points of their strategy are outlined below:

 Raising taxpayer awareness

This effort is designed to educate taxpayers on methods of protecting their tax and financial information and to increase their awareness of the dangers of tax fraud and identity theft.

 Authenticating taxpayer information

Included in this initiative are steps designed to authenticate the computer device tied to a return’s point of origin and to review the data tied to the transmission process. The review of transmission data will focus on such items as the internet address associated with the return as well as the metadata generated by its electronic submission.

 Identifying fraud

This initiative incudes an expanded effort to gather analytical information and fraud data from all parts of the tax industry. Because fraud schemes are easier to pinpoint with large amounts of data, this initiative should help to identify fraud schemes before they have a chance to proliferate.

 Sharing information

As part of this effort the committee plans to establish a Refund Fraud Information Sharing and Assessment Center. This will allow the public and private sectors to share tax information efficiently which, in turn, will provide more accurate data to support fraud investigations.

 Increasing cybersecurity

Under this initiative, members of the broader tax industry have agreed join the IRS and state tax agencies in abiding by the cybersecurity standards set by the National Institute of Standards and Technology.

Tax Commissioner John Koskinen summarizes the recent efforts of the Security Summit by saying that they should give taxpayers “a safer and more secure experience” this next filing season. He goes on to say that, although the recent agreement represents great progress in the area of taxpayer security, efforts to safeguard the tax filing procedure will continue. According to Koskinen, this new effort is “good for taxpayers, good for tax administrators and good for the tax community.”

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