Tax returns on hold while IRS asks 'Who Are You?'
Agency also working with tax industry to fight filing fraud
Saturday, March 21, 2015
Theoretically, everyone wants the Internal Revenue Service to do whatever it takes to stop identity theft tax fraud.
But when the theoretical becomes practical, it's harder to be jazzed about IRS efforts to combat fraud. That's the case for folks who are part of the tax agency's channeling of The Who.
The IRS is asking that classic rock and roll question -- and yes, younger readers, it was a real hit song back in the days of radio, well before the CSI television franchise -- of folks whose names and/or Social Security numbers show up on returns that in other respects appear to be suspicious.
The IRS is sending these folks an official notice, Letter 5071C, instructing them to go to the website idverify.irs.gov to confirm that they are the people who filed the returns in question. At idverify.com they will be asked a series of questions that only the real taxpayer can answer.
ID verification site is real: Some folks no doubt are freaking out a bit at getting a letter from the IRS telling them to go to a website and answer personal questions.
But as I note in my Bankrate Taxes Blog post IRS seeking taxpayer ID verification, it's a legit request. Note the .gov extension at the end of the URL.
Fighting tax fraud in 2016 and beyond: While the identity verification system is in place now, the IRS already is working on additional ways to stop tax fraud next filing season.
IRS Commissioner John Koskinen last week met with the heads of some of the major tax software companies, tax preparation chains, state tax commissioners and other officials to discuss ways they as a group could fight the growing problem of identity theft and associated filing fraud.
Among those at the meeting were representatives of H&R Block, Intuit (TurboTax's parent company), Liberty Tax Service, Thomson Reuters Tax & Accounting, the Federation of Tax Administrators, Drake Tax Software, FileYourTaxes.com, Green Dot, Wolters Kluwer Tax & Accounting (parent of CCH), the Free File Alliance, and the Council for Electronic Revenue Enhancement.
Koskinen noted after the gathering that while the IRS now is stopping more fraudulent filings than before via efforts such as the 5071C letters, the goal of his agency and the overall tax industry is "not just to catch up, but to get ahead of the problem. We need to do more to protect the taxpayer and the tax system."
The companies agreed to form three working groups (overview, technology and information sharing) to examine such issues as taxpayer authentication, identity theft prevention and analysis. The groups will build on the work that's been done in the past by the IRS, state tax administrators and technology companies.
The goal is to develop anti-tax-fraud steps that can be implemented for next filing season. The groups hope to have recommendations by this summer to give tax software companies and preparers time to adjust their systems.
IRS needs money, too: While the combined public-private effort to further fight tax fraud is commendable, it will take more than just the efforts by tax software companies.
The IRS needs to upgrade its systems to better catch tax fraud, too. But that takes money. And getting Congress to cough up cash for the IRS is a very difficult -- OK, in the current hyper-partisan political atmosphere, impossible -- task.
Such penny pinching, however, is no good for anyone. Not the IRS. Not Uncle Sam's bank balance. And certainly not us taxpayers.
I look at the real costs of IRS budget cuts in another post last week at my other tax blog. In that item, I note that the IRS has at least one friend on Capitol Hill.
Rep. Keith Ellison, D-Minn., thinks the tax collecting and enforcement agency needs more money and is seeking colleagues to sign a letter to that effect. Nice try, Rep. Ellison, but I fear you won't get many letter signing takers.
My additional thoughts at Bankrate Taxes Blog generally are posted on Tuesday and Thursday. If you miss them on those days, check in here over the weekend where you'll usually find highlights and links.
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