The IRS head criminal investigator, Richard Weber, had a message for all taxpayers while speaking at a conference on January 25th. “File early before the criminals file for you,” Weber said. Weber explained that “current intelligence” indicates that criminal groups have amassed stolen taxpayer identification information to be used to file fraudulent refund claims during the 2016 filing season. “We’re able, in real time, to see activity and conversations among bad guys, saying they have information from legitimate taxpayers, and they are ready to ping the IRS system in the coming weeks.” According to Weber, some criminal organizations are devoting 100% of their time attacking the IRS computer system in hope of obtaining information and the IRS has already received some false returns.
Weber claims that the IRS is at a serious disadvantage in its attempt to combat identity theft and fraudulent refund claims due to inadequate funding and cyberattacks. Weber explained that the IRS has fewer special agents assigned to combating tax crimes than it did in 1995, which is troubling because of the increase in the number of cyberattacks and identity thefts. Weber said the IRS currently has 1000 open criminal cases involving identity theft but the pressure from cyber criminals is unrelenting and growing. The ability for the IRS Criminal Investigation Division to combat identity theft and continue investigating ordinary tax crimes is becoming more difficult each year.
The bottom line is that tax practitioners and their clients will need to continue efforts to protect information and be prepared to address fraudulent tax filings in 2016.
If you, your client or someone you know is a victim of identity theft please see IRS Publication 5027.