The Internal Revenue Service has launched the second year of its public awareness campaign aimed at improving taxpayer security in partnership with tax software companies, tax preparation chains, and state tax authorities.
The campaign from the IRS and its partners in its Security Summit program includes a series of security awareness tax tips, a set of suggestions on the Taxes. Security. Together. web page and the single-page Publication 4524, Security Awareness for Taxpayers.
IRS Commissioner John Koskinen spoke about the agency’s security efforts and how it is working with tax professionals during the American Institute of CPAs’ National Tax Conference in Washington, D.C., on Tuesday.
“While much credit goes to our dedicated and talented workforce, I remain convinced that the IRS would not be able to fulfill its mission if we couldn’t rely on our partners in the tax preparation community,” he said. “One of the most important things I learned early on after becoming IRS commissioner was the vital role that preparers play, year in and year out, in helping taxpayers meet their tax obligations. Over the past three years, my appreciation for all you do for tax administration has not only deepened, but it continues to grow, and I welcome the opportunity to thank all of you in person for the work that you do.”
Koskinen pointed to the success of this past filing season. He noted that the extra $290 million in funding provided by Congress last year for this past tax season helped the IRS improve its ability to help taxpayers and practitioners when they called with questions about their tax returns. The extra money was earmarked by Congress for taxpayer service, cybersecurity and identity theft prevention. “As a result, we were able to add during the filing season 1,000 additional personnel to be able to answer the phone, with the result of a significant increase in the level of service on those phones,” he said.
The agency went from 37 percent to over 70 percent in the service level for answering phone calls.
“Most importantly for you, we always have prized the relationship with the tax preparation community and one of the things I was most concerned about was the decline in service on the Practitioner Priority Line,” said Koskinen. “At one point, it took as long to get through on the priority line as it did if you went through the regular approach to the IRS, so the Practitioner Priority Line became a bit of an oxymoron. But last year, the level of service on the Practitioner Priority Line went to over 80 percent.”
Since the extra funding ran out after tax season, the level of service for regular taxpayers has declined, Koskinen admitted, but the level of service on the Practitioner Priority Line has remained above 80 percent.
He remains concerned about the level of funding the IRS will receive from Congress next year. However, he assured the audience that during the presidential transition will remain focused on its mission as it continues to be run by career employees and civil servants.
“As we move forward and look at the funding levels we’re involved with, we are also dealing aggressively with the issue of stolen identity and refund fraud,” said Koskinen. “A year and a half ago we brought together the CEOs of the major tax preparers, the software developers, financial institutions, Green Dot the major debit card company, and all of the tax commissioners, and I told them when we gathered that the purpose was not to tell them what to do, but the purpose was to form for the first time a real partnership to deal with stolen identities and refund fraud. I told them there was no way anyone of us or any group of us was going to be able to solve this problem.”
They created working groups to deal with various aspects of the problem, adding extra authentication to verify the identities of taxpayers and share data elements that could point to signs of fraudulent returns. As a result, the IRS has been able to significantly reduce the instance of tax fraud tied to identity theft.
“Through the first nine months of this year, the number of taxpayers who have filed an affidavit with us noting that they’ve been a victim of identity theft and therefore refund fraud dropped by over 50 percent,” said Koskinen. “We’ve made progress over the years, but up ’til now, we’ve never been able to make that kind of a dent in the problem. And it’s a direct result of the partnership and the cooperation we’ve had with the private sector, with the states, with the software developers.”
He pointed to new initiatives this year to increase the probabilities of success in the battle against identity theft, including new Form W-2 codes to authenticate taxpayers and stop suspicious returns. However, he warned tax preparers against complacency.
“One of the things we know is that it’s an ongoing battle,” said Koskinen. “We are no longer dealing with just individual criminal entrepreneurs, although they probably started with prisoners 10 years ago. We’re now dealing with organized crime syndicates around the world. The amount of information they have on the so-called ‘dark net’ is stunning. There’s a group in Eastern Europe with allegedly a billion user IDs and a billion passwords, and they’re able to ping banks and accounts in financial institutions with the user IDs and then the passwords. And once they get a match, because a lot of people use the same user ID and password, they can now ping financial institutions and track down accounts. So it’s no longer beanbag that we’re playing. We’re actually waging a serious ongoing battle.”
One of the concerns, he noted, has been to try to get ahead of the game by trying to predict where criminals are going next. And they seem to be going after tax preparers, which is why the Security Summit has been doing more outreach to tax practitioners.
“One of the things we’ve been concerned about is the threat to tax preparers,” said Koskinen. “To the extent that you can’t get into our system as easily as you used to, and you can’t get into the state systems, the logical next place to go is to tax preparers because if they can hack into your systems and get the data about your clients in detail, they are then much better able to file a more authentic-looking fraudulent return.”
In response, the Security Summit launched the “Protect Yourself. Protect Your Clients” initiative to provide as much information as possible to individual practitioners and larger groups about steps they can take to protect their systems. However, he said the IRS would not mandate security standards for preparers.
Among the recommendations are:
• Always use security software with firewall and anti-virus protections. Make sure the security software is always turned on and can automatically update. Encrypt sensitive files such as tax records you store on your computer. Use strong passwords.
• Learn to recognize and avoid phishing emails, threatening calls, and texts from thieves posing as legitimate organizations such as your bank, credit card company and even the IRS. Do not click on links or download attachments from unknown or suspicious emails.
• Protect your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure. Treat your personal information like you do your cash; don’t leave it lying around.
“Fortunately the number of intrusions is relatively small,” said Koskinen. “Equally, fortunately, whenever there have been those handfuls of problems, the preparers have been able to let us know immediately. We’ve let our partners know, and we’ve been able to protect taxpayers in those systems.”