“The Security Summit effort is making a difference,” reported Internal Revenue Service (IRS) Commissioner John Koskinen today at a Security Summit Group update. “The effort has helped protect taxpayers, keeping more of their money out of the hands of criminals.”
The Security Summit Group, which kicked off in March of 2015, is a collaboration between IRS, state tax agencies, and the private-sector tax industry. Today, leaders from the IRS and state tax agencies, along with executives from the private-sector tax industry, met to discuss the partnership’s accomplishments over the past year and tout what’s coming in 2017. Those on hand for the update included IRS Commissioner John Koskinen; State Revenue Commissioner of Delaware Pat Carter; State Revenue Commissioner of New Mexico Demesia Padilla; H&R Block CEO Bill Cobb; Intuit CEO Brad Smith; and Green Dot CEO Steve Streit.
Koskinen noted that, as a result of the Security Summit Group, taxpayers were more protected from tax-related identity theft and tax agencies were able to stop more suspicious tax returns seeking fraudulent refunds. Specifically, IRS found that:
- From January through April 2016, the IRS stopped $1.1 billion in fraudulent refunds claimed by identity thieves on more than 171,000 tax returns, a nearly 50% boost from last year’s dollars. Koskinen praised better internal processing filters for the increase in capturing suspicious returns, noting that the filters were put in place thanks to better data from returns and information about schemes.
- From January through May 8, 2016, the IRS also suspended 36,000 suspicious returns which claimed $148 million in refunds. This was more than twice the number of suspicious returns which were flagged over the same period in 2015. These suspicious returns were noticed following leads reported from tax industry partners.
- The number of anticipated taxpayer victims fell between 2015 and 2016. In fact, since January of 2016, the IRS Identity Theft Victim Assistance function received 48% fewer correspondences, including federal form 14039, Identity Theft Affidavit, (downloads as a pdf) filed by identity theft victims.
- The number of tax refunds that banks and financial institutions returned to the IRS because they appear suspicious dropped by 66%. This, the IRS says, is another indication that improved data led to better filters further reducing the number of bad refunds being issued.
Koskinen says that many of the safeguards put in place for the 2016 filing season as a result of the Security Summit Group were “invisible to taxpayers.” This included data sharing and information leads, as well as a “rapid response” team put in place to alert the IRS, industry and state partners of emerging issues, often within 24 to 48 hours.
Noting that criminals are continuing to step up their game as IRS, state agencies and the private-sector tax industry ramp up their efforts, Koskinen said, “we have a lot more work to do.” As part of that work, the Security Summit Group will be made permanent and as of July 1, 2016, will come under the Electronic Tax Administration Advisory Committee (ETAAC), or ETAAC. Additionally, the Group is analyzing results of the 2016 filing season to find ways to improve authentication of taxpayer identities when they file their returns. Koskinen pointed out that technology is changing so quickly that what might once be considered secure – like out of wallet authentication, once considered to be sufficient authentication – is often outdated and insecure the next season.
Following a pilot program from last season, the Security Summit Group will expand the W-2 Verification Code program for next season. As part of the program, a 16 digit verification code was entered on copies B & C of approximately 2 million forms W-2 to verify the authenticity of the data. Next season, the code will be expanded to approximately 50 million forms W-2. When asked why the code would not be expanded to all taxpayer forms W-2, Koskinen referenced costs and resources within the payroll service community and the software industry.
Additional efforts will be mostly invisible to taxpayers with one exception: the Summit will expand the “Taxes. Security. Together.” awareness campaign to tax return preparers to ensure they have the information they need to protect themselves from cyber attacks and to safeguard taxpayer data. This is part of efforts to collaborate with the tax return preparer community after evidence has suggested that identity thieves are turning their attention to focus on tax return preparers.
State tax agency leaders and tax industry experts also spoke at the update today, with H&R Block CEO Bill Cobb calling Koskinen the “catalyst” for the Security Summit Group, praising his “incurable optimism.” Cobb noted, specifically, that the industry had enthusiastically supported the group’s mission which had the two largest industry leaders, H&R Block, and Intuit, working side by side. “As a group,” Cobb says, “we have already demonstrated the great progress that can be achieved when we all work together.”
Intuit CEO Brad Smith agreed, stating afterward, “We must also do more to help those who have become tax fraud victims. Government and industry must provide faster and better relief to innocent taxpayers who have been victimized by identity theft and tax fraud. This is a priority, and we must continue to address it in the Summit process.”
