WASHINGTON – The Internal Revenue Service, state tax agencies and industry partners today finalized plans for 2017 to improve identity theft protections for individual and business taxpayers after making significant inroads this year against fraudulent returns.
Public and private sector leaders announced today that their collective efforts through the Security Summit initiative have led to a marked improvement in the battle against identity theft during 2016. This is highlighted by the number of new people reporting stolen identities on federal tax returns falling by more than 50 percent, with nearly 275,000 fewer victims compared to a year ago.
At a Washington press conference, Summit leaders also detailed new and expanded safeguards for taxpayers in the upcoming 2017 tax season. The 2017 focus revolves around “trusted customer” features that will help ensure the authenticity of the taxpayer and the tax return – before, during and after a tax return is filed. The additional protections will build on the 2016 successes that prevented fraudulent returns and protected tax refunds.
“We’ve made remarkable progress this year in our efforts to protect taxpayers following the unprecedented coordination with the states, the tax industry and the financial sector,” said IRS Commissioner John Koskinen. “Working together, this coalition has expanded its activities in many different areas, and we are focused on strengthening our systems and processes even more for the upcoming tax season.”
“It is gratifying to see how many different ways we have already identified and begun to implement changes,” said Dawn Cash, Commissioner, Oklahoma Tax Commission and President, Board of Trustees of the Federation of Tax Administrators. “Taxpayers in states across the country are benefiting from this important work.”
Summit Helps Produce Successes in 2016 Against Identity Theft; Victims Down by Half
Security Summit initiatives put in place in 2016 had a dramatic impact on the collective ability to identify and stop fraudulent returns. Key IRS statistics show decreases because Summit efforts were successful at preventing fraudulent returns from entering tax processing systems. This meant fewer bad returns, fewer bad refunds and fewer taxpayers becoming victims.
Among the examples seen by the IRS:
“We’ve come a long way in a short time following the creation of the Security Summit,” Koskinen said. “But much more work remains to be done, and the partnership has agreed to take even more steps to protect taxpayers in 2017.”
More Steps Planned for 2017 Tax Season
For the 2017 filing season, the IRS and Summit partners will take additional actions. As with 2016, many of the new features will not be visible to taxpayers but will provide the IRS and states with the information they need to identify and stop fraudulent identity theft returns.
Among the new or expanded features for 2017 that will protect taxpayers and the tax system:
Taken together, these “trusted customer” features will help the IRS and states do an even better job of detecting fraudulent returns and protecting taxpayers.
As part of that effort, the Summit partners will launch a new Identity Theft Tax Refund Fraud Information Sharing and Analysis Center, or ISAC. This project, in its initial stages for 2017, will serve as an improved early warning system – identifying emerging identity theft schemes and quickly sharing that information among Summit partners so that all of the participants can enact safeguards.
Summit partners believe an ISAC ultimately promises significant gains in detecting and preventing identity theft refund fraud and will provide better data to law enforcement to investigate and prosecute identity thieves. This effort will provide all Summit partners with a threat assessment capability, early warnings about problems and insights about identity theft fraud schemes through nimble and agile information sharing.
Education Campaign Continues for Taxpayers, Tax Professionals
The Security Summit will continue its campaigns to increase awareness about data security to both taxpayers and tax preparers. Last year, the Summit partners launched the “Taxes.Security. Together.” campaign to encourage taxpayers to take greater data security precautions and to learn how to recognize and avoid phishing emails that seek to trick people into providing sensitive data such as Social Security or credit card numbers.
This year, the Summit partners expanded the campaign to include tax professionals, who increasingly are being targeted by criminal syndicates. Summit partners initiated a new campaign called “Protect Your Clients; Protect Yourself” and urge tax professionals to use the best security practices available. Tax professionals should review Publication 4557, Safeguarding Taxpayer Data, to see an action check-list for ensuring data security.
As tax season approaches, the IRS and Summit partners will share more tips for tax professionals in upcoming weeks. And for taxpayers, the “Taxes.Security.Together” campaign will resume for a second year in the weeks leading up to the opening of the 2017 filing season in January with important information that taxpayers can use to protect their sensitive taxpayer and financial data.