The Senate unanimously passed bipartisan legislation last week to thwart identity theft tax refund fraud and prevent American taxpayers and seniors from falling victim.
Tax-related identity theft occurs when someone uses a stolen Social Security number to file a tax return claiming a fraudulent refund.
The bill was authored by U.S. Sens. Doug Jones and Susan Collins, R-Maine.
Their bill, which was included as a provision in the Taxpayer First Act, previously passed the House of Representatives and now heads to President Donald Trump’s desk to be signed into law.
The Taxpayer Identity Protection Act would require the IRS to expand its Identity Protection PIN (IP PIN) pilot program nationwide over the next five years. An IP PIN is a six-digit number assigned to eligible taxpayers that allows their tax returns and refunds to be processed without delay and helps prevent the misuse of their SSNs on fraudulent income tax returns. This legislation would allow taxpayers to opt-in to the IP PIN pilot program if they desire an extra layer of identity protection.
“The fact that this bill passed Congress with bipartisan support is great news for all taxpayers, especially the seniors who are more likely to be targets of tax return fraud and scams,” Jones said. “This is a concrete step that will help protect American taxpayers by reducing identity theft and saving over a billion dollars in taxpayer money each year.”
The IRS has made progress in decreasing the number of identity theft refund frauds in recent years. According to a 2018 report from USA Today, the number of reported tax identity-theft victims in 2018 was down 19 percent from 2017 and 72 percent lower than in 2015, thanks to a data-sharing agreement among the IRS, national tax professional groups, state revenue departments and software preparation companies to help detect suspicious returns and reduce the number of stolen refunds.
Though progress has been made in lowering the number stolen refunds, tax return fraud and scams continue to be a major challenge facing the IRS, costing victims a total of $1.7 billion in 2016 alone. In 2010, 76,000 low-income senior citizens were victims of this theft. In 2017, the Federal Trade Commission received more than 82,000 complaints related to tax-refund fraud.