IRS Summit Produces ID Theft Pact with Tax Software Companies

It wasn’t quite the Geneva conference, but a “summit meeting” on June 10 between the IRS and leaders from tax preparation and software firms, state tax officials and others could provide stronger deterrent to thefts of tax refunds involving ID theft.

According to an IRS press release, the agreement reached in Washington D.C. identifies new steps for validating taxpayer identities when tax returns are filed, increases information sharing between industry and governments and provides uniform standards for locating fraud patterns. And the parties at the summit have vowed that their collaborative efforts won’t end here.

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,” said IRS Commissioner John Koskinen in a prepared statement. “We’ve made tremendous progress, and we will continue these efforts. Taxpayers filing their tax returns next filing season should have a safer and more secure experience.”

Koskinen got the ball rolling back on March 19 when he first convened with chief executive officers and leaders of private sector firm and federal and state tax administrators to discuss emerging threats on ID theft and expand existing collaborative efforts to stop fraud. Three specialized groups were established with members from the IRS, states and private industry co-chairing and serving on each team. During the past 12 weeks, the three teams focused on developing ways to validate the authenticity of taxpayers and information included on tax returns, information sharing to improve detection and expand prevention of refund fraud and threat assessment and strategy development to prevent risks and threats.

The groups agreed to several important new initiatives including the following:

Taxpayer authentication: The groups identified numerous new data elements that can be shared at the time of filing to help authenticate a taxpayer and detect identity theft refund fraud. Data will be submitted to the IRS and states with the tax return transmission for the 2016 filing season. Some of these elements are:

  • Reviewing the transmission of the tax return, including the improper and or repetitive use of Internet Protocol numbers and the Internet ‘address’ from which the return is originating.
  • Reviewing computer device identification data tied to the return’s origin.
  • Reviewing the time it takes to complete a tax return, so computer mechanized fraud can be detected.
  • Capturing metadata in the computer transaction that will allow review for identity theft related fraud.

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