IRS Takes Steps to Reduce Fraud

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IRS Takes Steps to Reduce Fraud

The IRS is now taking additional steps to combat the rapid increase in taxpayer identity theft. Here is what you need to know about what is happening now.

In its ongoing effort to tackle the increase in fraud and identity theft at the IRS, there are a number of security enhancements announced to deal with the problem.

Limiting direct deposits into a single account

The problem: Would be thieves set up a deposit account at a local bank. They then file numerous tax returns claiming refunds early in the tax filing season. The tax returns request the refunds be sent to this single bank account. The account is then electronically drained of the stolen funds and the thieves are long gone.

The solution: Effective in early 2015, the IRS is limiting refund deposits into any single bank account to a total of three times. Any additional requests to deposit funds into the same account will automatically reject and a paper check will be issued to the taxpayer.

Matching account names with the taxpayer

The problem: The financial institution account holder may not necessarily match the name on the filed tax return. This could be the case with a parent filing for a child or stepchild. Unfortunately, it is also the case with massive tax fraud rings.

The solution: The IRS will now try to match the bank account holder to the name on the tax return.

TIN and SSN security

The problem: The publishing of Social Security Numbers (SSN’s) on documents creates an identity risk as thieves target mailboxes to obtain these key numbers. Tax Identification Numbers (TINs) also have the same problem.

The solution: Fewer documents will show the entire SSN or TIN. In addition, there will be an effort to inactivate unused identification numbers.

Use of Personal Identification Numbers (PINs)

The problem: When the IRS opens a case of identity theft for a taxpayer, what steps are taken to ensure your filed tax return is accepted and not the one created by identity thieves?

The solution: If you are a victim of identity theft, be prepared to file your tax return in paper format. The IRS has also created a Personal Identification Number (PIN) system to provide an added level of tax identification for those impacted by the theft of their personal information. In this case you must fill in your IRS PIN in addition to your Social Security Number.

Additional steps are being taken as well. Please remember that the IRS never asks for personal information via email or telephone. If you are ever approached in this fashion, you should be wary that these thieves are trying to make you their next victim. To find out more or to report suspicious behavior please visit the irs web site at: http://www.irs.gov/uac/Report-Phishing