IRS taking steps with state, industry officials to combat taxpayers' identity theft



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WASHINGTON — The IRS is joining with states and private industry to combat identity theft by sharing more data about how tax returns are filed, officials announced Thursday. The effort is aimed at stemming a problem that has victimized thousands of taxpayers and cost the government billions of dollars from fraudulent returns.

IRS Commissioner John Koskinen said the new procedures will be in place by the time taxpayers file their 2015 returns next year.

"We all understood that no single organization can go it alone," Koskinen told reporters in a conference call that included officials from states and tax software, tax preparation and other companies. "None of us has a silver bullet to defeat this enemy."

The steps were announced two weeks after the IRS acknowledged that criminals had stolen personal information about 104,000 taxpayers from an agency website.

At the time, Koskinen said the lawbreakers had already used the data to claim up to $50 million in fraudulent tax refunds. Two officials told The Associated Press that the IRS thinks the criminals were based in Russia.

Overall, the IRS has estimated it paid $5.8 billion worth of fraudulent refunds to identity thieves in 2013. Koskinen said existing procedures identified 3 million suspicious tax returns this year before they were processed, 700,000 more than last year.

Officials also recently revealed that the government faces a far broader problem. Hackers in China have broken into the federal government's personnel agency, the Office of Personnel Management, and stolen identification information of at least 4 million federal workers.

An official of a federal employees' union said Thursday that the problem was even worse than officials have described and that the hackers have stolen Social Security numbers and other personnel data for every federal worker.

Koskinen said government and industry officials have agreed to share new information aimed at stopping identity theft as fraudulent returns are filed. This would include reviewing information about the Internet addresses used by filers and matching information about computers and the returns they generate.

He said government and industry would also share more fraud leads and set up formal systems for doing that.

"We have come to realize we are now dealing with a much more sophisticated enemy than in the past," Koskinen said. He added, "We are dealing more and more with organized crime syndicates here and around the world."

He said once all the new protections are in place, taxpayers won't notice much difference. The biggest changes will be "everything that goes on behind the scenes," he said.

Koskinen said the IRS website that was hacked, "Get Transcript," wouldn't be reopened for public use until officials are convinced that security measures they are adding "will protect taxpayer information adequately."

Taxpayers used "Get Transcript" to retrieve tax returns and other tax filings from previous years.

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