IRS chief: We’ve got upper hand on ID theft

The IRS is gaining the upper hand in the battle against identity thieves stealing tax returns, the agency’s commissioner, John Koskinen, said Tuesday.

Koskinen told a conference of certified public accountants that the IRS had made great strides in stopping identity theft in the last several years, but that its work is far from finished.

“I would say we’ve got it under control, but it still is a big problem,” Koskinen told reporters after addressing the American Institute of CPAs conference. “It’s not continuing to grow exponentially the way it was two or three years ago, four years ago.”

Exactly how much the IRS hands out in fraudulent returns is hard to pin down. The Government Accountability Office pegged that number at $5.2 billion for 2013, while Treasury’s inspector general for tax administration found a decrease to $3.6 billion for 2011.

Either way, Koskinen said the IRS had stabilized the situation, to the point where the agency had effectively stopped amateur thieves but still had to deal with more organized criminals.

The IRS chief said that roughly 1,500 people had gone to jail in recent years because of fraudulent return schemes, with another 1,000 currently under indictment.

Looking forward, Koskinen asked Congress to move up the deadline employers face for submitting W-2 forms, which would give the IRS a better chance to check tax returns before refunds go out the door. He added that the IRS was trying to improve its information technology to better combat the fraud.

But Koskinen also noted that improving IRS systems would be a challenge without better funding, an issue he has made central to his tenure at the agency. Congress has rolled back the agency’s budget since Republicans took over the House after the 2010 elections, and the agency’s improper scrutiny of Tea Party groups has made it even more difficult to lobby lawmakers for more money.

Koskinen told the CPA conference that the IRS would soon start to give Congress a more detailed description of how the agency would overhaul its information technology systems if it got a funding boost.

“We need to be better at describing for the — what’s it going to look like in three to five years from now, if we get the funding. And then you can hold us accountable,” Koskinen said after his speech.

The IRS, Koskinen added, didn’t need to be at the cutting edge of technology. But the commissioner did say he hoped the agency could eventually offer information similar to what bank customers can find online.

“If you don’t want to give us the funding, that’s fine,” Koskinen said during his speech about the message he was sending to lawmakers with the more detailed plans. “But this is what you’re not going to get.”