How the IRS Protects Taxpayers from Tax-Related Identity Theft

Two hands cupped under three locks with Security Summit under them

Whether or not you’ve heard of the “Security Summit,” you’ve benefited from the work this group does. The Security Summit is a partnership between the Internal Revenue Service, state tax agencies and the private-sector tax industry. Together they work to combat a common enemy – identity thieves.

Since its start in 2015, the Security Summit partners have made tremendous progress. That said, as 2020 proved, there is still much work to be done.

No longer a petty crime of opportunity perpetrated by unorganized criminals and unscrupulous tax preparers, tax-related identity theft evolved into a major enterprise by well-funded, technically sophisticated national and international criminal syndicates.

These criminals have the capabilities to steal people’s names, addresses and Social Security numbers in massive data breaches from businesses and other organizations. Making matters worse, they have the tax savvy to quickly use that stolen information to file fraudulent tax returns claiming refunds from the IRS.

Working together, the Security Summit partners have identified actions to better protect the nation’s taxpayers from tax-related identity theft. These actions range from minor to major activities, many invisible to taxpayers, but invaluable to identifying and stopping stolen identity refund fraud.

Some changes were more noticeable to the average person. For example:

Tax product providers agreed to strengthen password protocols. This is the first line of defense for these companies to make sure their products are secure.
State agencies began asking for taxpayers’ driver’s license numbers as another way for people to prove their identities.
The IRS limited the number of tax refunds going to financial accounts or addresses.
The IRS redacted personal information from tax transcripts.

All Security Summit partners took steps to strengthen their anti-fraud efforts. Because software providers share more non-tax information with the IRS, the agency is better able to identify fraudulent returns before accepting them into the processing pipeline. For any tax returns that make it past that barrier, the IRS has improved its fraud filters to better identify them as fraudulent.

Security Summit partners now consist of the IRS, 42 states and 25 private-sector businesses and associations. They focus on “trusted customer” issues – ensuring the person filing a tax return is the person they say they are.

The partners also recognize they could not combat these criminals alone. They need the help of taxpayers and tax professionals to also take steps and protect their own data.

To get this done, the Security Summit has created several campaigns to educate taxpayers and tax preparers about what they can do to help stop identity theft.

Click here to read the rest of the article on the IRS web page.