It’s Fix The Tax Code Friday!
Tax season opened on January 23. This year, some tax refunds are going to take a little longer: a new law requires the Internal Revenue Service (IRS) to wait until February 15, 2017, to issue refunds to taxpayers who claimed the earned-income tax credit (EITC) or the additional child tax credit (ACTC). The delay is intended to give the IRS time to match tax forms issued to taxpayers with those issued by employers and make it more difficult for scammers and thieves to steal taxpayer funds.
The new law is just one way that the feds are tackling identity theft this year. Other steps include new verification codes, additional reviews, and a partnership between the IRS, state tax agencies, and the private-sector tax industry to fight fraud.
It appears to be working. Earlier this year, IRS Commissioner John Koskinen announced that these efforts have led to a 50% decline in the number of new reports of stolen identities on federal tax returns. The data also showed a nearly 50% drop in the number of fraudulent tax returns processed by IRS.
The IRS says there is still more work to be done. That will include increased information sharing between state and federal agencies, as well as between tax industry leaders. New metrics and security measures will also be introduced in an effort to keep taxpayer data safe.
The downside? The time that it takes to implement some of these security measures means that tax refunds take more time to process.
That, of course, brings us to today’s Fix The Tax Code Friday question:
Should the federal government continue to take steps to delay tax refunds to taxpayers if it means that tax fraud is also slowed down?
