Identity Theft and Refund Fraud Overview

Identity theft and tax refund fraud are on the IRS’s radar, and they’re teaming up to protect YOU! The Security Summit Initiative is a one-of-a-kind partnership between the IRS, state tax agencies, and private tax industry leaders, working together to stop fraudsters in their tracks. Here’s how this powerhouse team is keeping your tax dollars safe and what you can do to help!

What’s the Security Summit Initiative?

This groundbreaking public-private partnership is like the Avengers of tax security! Launched to protect taxpayers for the 2017 filing season, it brings together:

• IRS: The federal tax pros.
• State Revenue Departments: Your state’s tax guardians.
• Private Tax Industry: The folks behind your tax software and prep services.

Their mission? To slap new, high-tech safeguards on the tax system and keep identity thieves from stealing your refund.

How They’re Fighting Fraud

• Stopping Fraudulent Returns: In 2015 alone, the IRS blocked 4.8 million suspicious returns, saving $10.9 billion in fraudulent refunds, including $8 billion from confirmed identity theft cases.
• Smarter Detection: Using advanced filters and data models, the IRS catches red flags like fake Social Security numbers or fishy income reports before refunds go out.
• Bank Partnerships: The IRS works with financial institutions to spot and stop shady refunds in real-time.
• New Password Rules: Tax software now requires 8-digit passwords with letters, numbers, and special characters, plus security questions and lock-out features to keep hackers out.
• State-Level Protections: Some states may ask for driver’s license numbers or issue paper refunds to verify identities (check your state’s tax website for details!).

Helping Victims of Identity Theft

Identity theft is a headache, and the IRS gets it. Here’s how they’re stepping up:

• Centralized Help: The IRS created a dedicated Identity Theft Victim Assistance team to resolve cases faster (though complex cases can still take 120+ days).
• IP PIN Power: Victims get a unique Identity Protection PIN (IP PIN) to verify their identity when filing. If you have one, use it—it’s required for 2017 federal returns (and some states have their own PINs too!).
• IP PIN Pilot: Taxpayers in Florida, Georgia, and D.C. can opt into the IP PIN program for extra protection.

Busting Criminals

The IRS’s Criminal Investigation (CI) team is cracking down hard:

• Over 3 years, they’ve helped convict ~2,000 identity thieves.
• In 2015, CI launched 776 investigations, leading to 774 sentencings with an average of 38 months in jail (one got over 27 years!).
• The Law Enforcement Assistance Program (LEAP) shares tax fraud info with over 1,100 state/local agencies to catch culprits.
• The Identity Theft Clearinghouse has tracked 10,750+ leads, involving $11.4 billion in fraudulent refund claims since 2012.

The “Taxes. Security. Together.” Campaign

The IRS is calling on you to join the fight! Through the Taxes. Security. Together. campaign, they’re urging everyone to:

• Lock Down Your Info: Use strong passwords and secure your personal/financial data online and at home.
• Stay Alert: Watch for suspicious activity, like unexpected IRS letters or unfamiliar bank transactions.
• Act Fast: If you’re a victim, respond to IRS notices quickly to resolve issues and get your refund.

Why This Matters to You

Filing a fraudulent tax return is a federal crime with big consequences:

• High-Dollar Fraud: Up to $250,000 in fines (or $500,000 for corporations), 3 years in jail, and prosecution costs.
• Low-Dollar Fraud: Penalties up to $5,000 or 100% of unpaid taxes.
• The IRS isn’t out to get honest taxpayers—they need to prove you intentionally lied to charge fraud. So, keep your records straight and report all income!

Your Action Plan

• Use Strong Passwords: Protect your tax software accounts with complex passwords.
• Check State Rules: See if your state requires extra verification, like a driver’s license.
• Got an IP PIN?: Enter it on your federal (and state, if required) return.
• Report Suspicious Activity: Contact the IRS if you suspect identity theft.
• Need Help?: A tax pro or attorney can guide you through complex issues.

Let’s team up to keep your taxes secure and fraud-free!