IRS, e-tax companies clamp down on high-tech identity theft

WASHINGTON (MEDIA GENERAL) – The IRS and tax software companies are cracking down on high-tech identity thieves in 2016 with a slew of new security precautions.

IRS Commissioner John Koskinen announced the “Taxes.Security.Together.” initiative in Washington on Thursday, along with 17 state tax commissioners and executives from companies like H&R Block, TaxSlayer and Intuit, which owns TurboTax.

The public-private partnership institutes several new safeguards ahead of the 2016 tax season to head off the mounting problem of thieves stealing taxpayers’ identities and returns.

For customers preparing their own taxes online, that will mean jumping through a few additional hoops before hitting “file.”

The IRS encourages companies to implement checkpoints similar to those used in online banking programs, including:

  • Check for repetitive use of IP addresses
  • Limit unsuccessful login attempts
  • Stricter password complexity, including length and special characters
  • Require three security questions
  • PIN double verification through text or email

Koskinen says the IRS prevented three million cases of identity theft last year. But they did not catch them all.

Thieves stole 2.7 million taxpayer identities in 2015, according to CNN. “Taxes.Security.Together.” is aimed at dramatically reducing that number in 2016.

Through metadata accumulation and public-private cooperation, the IRS is taking proactive security to the next level. Koskinen describes the problem of identity and refund fraud as “a more serious and growing threat,” explaining that organized crime syndicates have gathered “almost unimaginable amounts of personal data from sources outside the IRS.”

Alabama State Revenue Commissioner Julie Magee played reporters a voicemail she received just the day before, phishing for her personal info. The woman’s recorded voice informed Alabama’s top tax official: “The reason of this call is to inform you that the IRS is filing lawsuits against you.”

FILE - In this April 13, 2014 file photo, the Internal Revenue Service Headquarters (IRS) building is seen in Washington. The IRS says thieves used an agency website to steal tax information from as many as 220,000 additional taxpayers. The agency first disclosed the breach in May. Monday’s revelation more than doubles the total number of potential victims, to 334,000. (AP Photo/J. David Ake, File)
FILE – In this April 13, 2014 file photo, the Internal Revenue Service Headquarters (IRS) building is seen in Washington. The IRS says thieves used an agency website to steal tax information from as many as 220,000 additional taxpayers. The agency first disclosed the breach in May. Monday’s revelation more than doubles the total number of potential victims, to 334,000. (AP Photo/J. David Ake, File)

Of course, the IRS is doing no such thing, but Magee worries other Americans could be bullied into turning over private information and inadvertently expose themselves to identity and tax theft.

The people behind these crimes, by and large, are no longer petty thieves plucking discarded pay stubs out of garbage cans.

Rick Reames III, director of the South Carolina Department of Revenue, explains there is “more comprehensive organized crime doing it; a lot of it is from Eastern Europe,” making prosecutions all but impossible.

When asked about privacy concerns, given past attacks on porous government databases, Virginia Tax Commissioner Craig Burns says the public-private alliance will share large scale concerns, not individual taxpayers’ personal records.

For instance, if an IP address or bank account number shows up multiple times, a red flag will be raised and coalition members notified.

At the state level, Burns insists, “We receive the return, we process it, we deal with it, we keep it. It’s ours.”

Tax and business leaders were quick to remind taxpayers the are doing their best, but ultimate success will require the public’s vigilance and compliance.

“Criminals rapidly change their tactics, just as we all must rapidly change our defenses,” implored Intuit VP Bernie McKay. Part of that evolution is adherence to new safety standards which could add several minutes to the filing process, but save hours of headache on the back end.

With “Taxes.Security.Together.” now in motion, McKay predicts a smoother 2016 filing season, saying, “It’s the industry, it’s the federal government, it’s the state government, and it’s the taxpayers themselves — together, we can beat this.”

More information on “Taxes.Security.Together.” available here.

Follow National Correspondent Chance Seales on Twitter.

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