IRS working now to stop fraud in the 2015 filing season

Any new security systems to hinder tax identity theft and refund fraud next filing season have to be designed, developed and tested by this summer, the head of the Internal Revenue Service said Thursday.

“We have a very effective system, but it’s clear we need to bring everyone together to become even more coordinated,” IRS Commissioner John Koskinen said at a press conference following a meeting with tax prep companies and industry groups, including H&R Block, Liberty Tax, Jackson Hewitt, Free File Alliance and Intuit, the parent company of TurboTax.

{mosads}Last month, TurboTax temporarily suspended state returns after a surge in fraudulent filings.

Koskinen said the issues at TurboTax were not part of Thursday’s discussions on how to better collaborate, share information and create stronger filtration systems. Though he could not give specific numbers, he said the IRS is catching more fraudulent filings than it has in the past.

“More people are receiving letters from the IRS asking for ID authentication,” he said.

According to the Federal Trade Commission, tax ID theft is on the rise. Last year, the agency said it received 109,108 complaints, which accounted for 32.8 percent of all identity theft complaints, up from 30 percent in 2013.

And Koskinen said criminals are only becoming more sophisticated in their efforts to claim fraudulent refunds.

“Our goal is not just to catch up, but to get ahead of the problem,” he said. “We need to do more to protect the taxpayer and the tax system.”

Funding, however, continues to be an issue.

Not only has funding been cut by by $1.2 billion since 2010, Koskinen said, the agency still has to come up with the money to meet statutory mandates like the $600 million needed to implement the Affordable Care Act.

“We continue to put more people and resources into ID tax fraud, but resources have been constraining,” he said.