The IRS is teaming up with tax software companies and state governments to make it harder for fraudsters to steal tax refunds.
IRS Commissioner John Koskinen mentioned the plans during a testimony before the Senate Finance Committee on Tuesday. He was answering questions about how fraudsters managed to steal tax forms of 104,000 Americans using the IRS website.
Koskinen was short on details for the new plans. But he said that starting in 2016, the IRS will coordinate closer with private companies and state tax authorities to block identity thieves who file fraudulent returns in other people’s names.
It’s oddly simple to claim someone’s tax refund. All it takes is their Social Security number. The rising tide of computer system hacks and massive data breaches (like that of health insurers Anthem and Premera) have given identity thieves access to Social Security numbers and other personally identifying information for millions of Americans. That’s what hackers need to steal tax refunds.
Koskinen said that three months ago, he met with state tax officials and the CEOs of major tax software and tax preparation companies — likely companies such as Intuit’s TurboTax and H&R Block. They agreed to partner together for next year’s tax season, sharing data and bolstering security.
“The purpose of this meeting is to start a partnership where we work together to fight the battle,” Koskinen said.
The IRS will release more details about this partnership next week, he said.
“Tax refund fraud exploded between 2010 and 2012,” Koskinen said. And it’s only gotten worse since then. Between 2011 and 2014, the IRS spotted and halted $63 billion worth of fraudulent tax refunds. But the IRS paid identity thieves $5.2 billion in 2011 alone.