IRS to fight fraud and identity theft with help from tax-prep firms

The IRS has just revealed a collaboration with various tax-preparation firms and software companies such as Intuit that aims to prevent refund fraud. It will introduce new safeguards to authenticate a person's identity, including monitoring and flagging repetitive use of IPs and reviewing a device's identifying info. The IRS website will also take note of how much people spend to complete a tax return to prevent bots from submitting them and will capture metadata that can be used to investigate filings. In addition, everyone involved will regularly share (anonymous) data and fraud leads among themselves in an effort to be more effective in identifying suspicious activities.

From the looks of it, the IRS has finally learned its lesson: just recently, the agency admitted that the tax data of 100,000 people were stolen from its transcript website. That eventually led to $39 million worth of fraudulent tax refund requests, which the government is blaming on Russia. The Treasury Inspector General for Tax Administration (that keeps an eye on the agency) said all these happened, because the IRS shrugged off the security upgrades it recommended.

According to The New York Times, IRS commissioner John Koskinen has admitted this at a news conference:

We have come to realize we are now dealing with a much more sophisticated enemy than in the past. It's clear that criminals have been able to gather increasing amounts of personal data as the result of ongoing data breaches at various sources outside the tax system.

The group plans to roll out the new security measures, along with campaigns to raise awareness about identity theft soon. It expects to be done before the April 15 filing deadline in 2016 to keep people's newly submitted documents safe.

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