Federal Manager's Daily Report

The IRS has said that a network of partnerships it launched in 2016 with state tax agencies and the private sector tax industry is showing results in decreasing tax-related identity theft and fraud.

The joint initiatives, “many invisible to taxpayers,” have resulted in fewer fraudulent tax returns being filed, fewer bad refunds being issued and fewer Americans identifying themselves as victims of tax-related identity theft, it said. Over 2015-2018, the number of taxpayers reporting they were victimized by identity theft dropped 71 percent and the number of confirmed identity theft-related returns fell by 54 percent, it said.

It said the IRS has expanded its fraud filters, states began using more information such as driver’s license numbers, software providers strengthened password requirements and added multi-factor identity authentication, and more financial institutions helped recover fraudulent refunds.

It added that as protections for individuals have improved, identity thieves “continue to change their targets and tactics” by focusing more on business identity theft and data theft from tax professionals, requiring changes in counter-measures as well.