The Internal Revenue Service announced Thursday that it would roll out new safeguards to protect against identity theft and refund fraud ahead of the 2016 tax season, with most of the new system implemented this summer.
The new protections were introduced just weeks after IRS Commissioner John Koskinen confirmed a breach of over 100,000 taxpayer accounts, which may have led the IRS to pay out up to $39 million in improper refunds.
“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,” Koskinen said in announcing the changes. “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.”
The measures included new systems to authenticate tax returns, tax industry cooperation to share information about possible frauds, and taxpayer education.
Thursday’s announcement was welcomed by Senate Finance Committee chairman Orrin Hatch, R-Utah, and ranking member Ron Wyden, D-Ore., who called it a “move in the right direction.”
The senators cautioned, however, that “the devil’s in the details, and we will be carefully monitoring how the new agreements are carried out to ensure taxpayers are being adequately protected and whether additional legislation is needed to protect taxpayers.” Hatch and Wyden noted that tax refund fraud has increased in recent years.
The steps announced Thursday were the result of a tax return preparer summit held by the IRS in March, before the incident in May in which fraudsters may have stolen as much as $39 million in refunds through taxpayer accounts.
The IRS said that the system changes would be made throughout the summer and fall in order to be prepared for the 2016 tax season. “We want to build these changes into the DNA of the entire tax system to make it safer,” Koskinen said.
