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Government watch
Tag Team
The payments industry and IRS are joining forces to ght back against ID theft-based tax fraud.
By Adam Perrotta, Assistant Editor
Identity theft-based tax refund fraud has ballooned over the past several years, as fraudsters have capitalized on easy access
to stolen personal data and ex- ploited loopholes in the IRS’s vetting process for refunds.
ID theft tax refund fraud cost
the government $5.8 billion in refund payments later determined to be fraudulent in the 2013 tax year, according to a Government Accountability O ce survey (the most recent year for which data
are available). Meanwhile, the Federal Trade Commission re- cently said tax refund fraud was
by far the biggest contributor to
a 47 percent spike in ID theft complaints it received in 2015.
But the IRS is making strides to combat the problem. The agency prevented or recovered $24.2 billion in attempted ID theft- related fraudulent refunds in 2013—81 percent by volume— and the payments industry has been one of the agency’s key partners in developing new safe- guards and closing the loopholes that have made tax refunds a prime target for fraudsters.
Banding Together
In June 2015, the IRS announced
a wide-ranging, public-private
plan to combat ID theft tax fraud, bringing together federal and state tax administrators, tax preparation software makers and providers
of tax-related nancial products, including prepaid cards. Under the initiative, the parties are co- ordinating the development of new veri cation steps to validate
industry
IRS