Ways the IRS Is Combating Identity Theft Against Taxpayers

Tax-related identity theft occurs when a thief files a fraudulent refund claim using a stolen social security number. The Internal Revenue Service (IRS) considers this a serious crime, due to the damage it can cause to taxpayers, businesses, non-profit organizations and the agency itself, especially during tax season

A crime can also be committed in situations where the perpetrator uses a stolen employer ID number to create fake W-2 forms. As a means of combating identify theft, the IRS has been aggressive in their attempts to protect taxpayers and help victims.

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More than 3,000 employees have been dispatched to work on identity theft-related situations, and the IRS also trains their workforce to detect identity theft indicators. As a result, the IRS says it has prevented 19 million questionable returns and protected more than $63 billion in fraudulent refunds from 2011 through October 2014.

This year, the IRS will continue to tweak their process further to boost the number and efficiency of the models used to identify illegal returns. The IRS also continues to expand partnerships with financial institutions to stop fraudulent refunds.

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Beginning in January, the IRS has limited the amount of direct deposit refunds to one account or pre-paid debit card to three. Additional legitimate refunds will be mailed as paper checks to the taxpayer, according to the IRS website.

The IRS also has procedures in place to help those who have already become victims, so they can avoid further frustrations when filing. This includes an Identity Protection PIN, a specific six-digit number that identifies a victim as the rightful filer of their federal tax return.

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Related Stories:

• What is Identity Theft?

• Will Budget Cuts to the IRS Lead to More Identity Theft of Taxpayers?