IRS beefs up efforts against tax refund fraud

October 21 08:09 2015

Continuing an effort to battle taxpayer identity-theft, IRS and tax industry leaders said Tuesday they’ve tested more than 20 new data elements on tax returns that will be used in 2016 to prevent fraudulent refunds. The new safeguards, part of an unprecedented public-private information sharing, mark the latest effort to halt a years-long surge in tax refund fraud, including an embarrassing breach in which cyber-thieves stole as much as $39 million in federal refunds based on taxpayer information hacked from an IRS website.635608998435988030-AP-IRS-Audits

Tax return preparation firms and other industry participants will share the data with the IRS and state tax agencies at the time of electronic filing, members of the so-called security summit said. Some of the elements include. Reviewing the transmission of tax returns, including any improper or repetitive use of Internet Protocol numbers, the electronic address where the return originated.

Examining computer device identification data linked to the return’s origin.

Checking the time it takes to complete a tax return, an effort designed to detect signs of computer mechanized fraud.

Capturing metadata from the computer transaction that will allow review for fraud related to identity theft.

Additionally, IRS and industry officials said tax software providers have agreed to strengthen validation requirements for new and returning customers by toughening password standards and implementing other measures to guard against account takeover by criminals filing fraudulent tax returns. Passwords will require a minimum of eight characters with upper case, lower case, alphabet, numerical and special characters. Three security questions will be added to the software, and a new timed lockout feature will limit unsuccessful log-in attempts, the officials said. IRS Commissioner John Koskinen said the new safeguards are not expected to cause a “sea change” in the time it takes for taxpayers to file their returns electronically.

 

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