You Know Who’s Looking Forward to Tax Season? Identity Thieves

One of the most high-profile hacking attacks in the United States struck last year when the Internal Revenue Service (IRS) was breached. 464,000 Social Security numbers were swiped; enough to file 101,000 tax returns using false personal identification numbers. Every organization can learn how to better protect themselves during tax return season, especially since you have so much on the line every year.

In response to the aforementioned threat, the IRS has made several improvements that allow the organization to (hopefully) better protect taxpayers as they perform their financial obligations. Specifically, these improvements are effective “before, during, and after a tax return is filed.” On the IRS’s official website, “This is highlighted by the number of new people reporting stolen identities on federal tax returns falling by more than 50 percent, with nearly 275,000 fewer victims compared to a year ago.”

One of the best tools that the IRS has used to cut down on these concerning identity theft numbers is an annual security summit. In part, the following results have been attributed to the summit:

• Fraudulent returns are being stopped more frequently before processing: The IRS accounted for almost 50 percent fewer fraudulent returns, which amounts to about 787,000 identity theft returns from January 2016 to September 2016. These returns would have totaled well over $4 billion.
• A significant decrease in fraudulent refunds: 106 new institutions became bank partners since 2015, and this played a role in cutting fraudulent refunds. The number of refunds that seemed questionable and were stopped by banks increased by more than 50 percent, and these suspect refunds were brought back to the IRS for further examination.
• A sharp decrease in identity theft affidavits: Throughout the first nine months of 2016, the number of identity theft affidavits was cut in half.
• New data on tax returns: With more data required to properly fill out a tax return, the IRS has managed to keep over 74,000 suspicious returns from processing, which in turn kept $372 million out of the pockets of identity thieves.
• Shared information stopped false returns: The sharing of data was instrumental in preventing 57,000 fraudulent tax returns, and it wouldn’t have been possible without the cooperation of various industry and state partners.

While these improvements are quite a start, any business owner who is also a taxpayer will want to know that the IRS still needs to improve the way that they handle sensitive data. This is only one reason why you need to take the matters of your own identity security into your own hands. For your review, the IRS has created a list of steps that should be taken in order to protect your organization and all of those that your business engages with from identity theft. You can find a list of these steps on the IRS’s website.

To learn more about how you can keep better track of sensitive information, reach out to Preferred at 708-781-7110.