While the IRS detected and blocked some 4,200 of the fraudulent returns, it failed to prevent the rest “despite other IRS functional areas identifying it back in August 2021. Image: Olivier Le Moal/Shutterstock.com
By: FEDweek StaffThe IRS “was slow” to react to stop a fraud against a function that serves tax professionals after warnings from other functions, an IG report has said, resulting in more than $47 million in losses from fraudulent tax returns.
A heavily redacted report says that fraudsters used information from the “practitioner priority service” line to file more than 4,800 tax returns claiming nearly $462 million in refunds between August 2023 and April 2024. That is a line that tax practitioners can use to obtain information for their clients, including tax return transcripts that detail sensitive tax data from a taxpayer’s filed tax return.
While the IRS detected and blocked some 4,200 of the fraudulent returns, it failed to prevent the rest “despite other IRS functional areas identifying it back in August 2021. The IRS did not put an adequate authentication control in place to combat identify theft and protect taxpayers’ personal information involving the PPS line until April 2024,” it said.
The IG added that it had issued a related security alert itself to IRS management in August 2023, after one of those offices alerted it to an impersonation scheme targeting that line.
It said that earlier this year the IRS started training employees on using a higher-level form of authentication protection.
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