Earlier this year, the IRS announced some changes to the tax return and refund process that were aimed at curbing rampant tax refund fraud. There was some concern that these changes were going to be unpopular, as the very first possible consequence was a slower response time in issuing refunds due to the further scrutiny of tax returns to avoid fraud.
Last August, the Identity Theft Resource Center described the changes the IRS was implementing. “The IRS is warning taxpayers that the rapid refund process is partly to blame and therefore will be investigated more closely. By processing a fraudulent return and paying the refund immediately, the money for your legitimate refund is gone. Therefore, the IRS plans to hold onto refunds, especially those that include the Earned Income Tax Credit or the Additional Child Tax Credit—two easily faked deductions that scammers use to up the amount you are owed—in order to process the returns more carefully.”
Fortunately, despite the warning of necessary delays, the refund process has moved forward in a somewhat typical fashion for most taxpayers. New data indicates that the reports of fraudulent returns have already dropped dramatically.
According to an article from USA Today, “The number of people who filed IRS affidavits stating they had been victimized by identity theft dropped 50% during the first nine months of the year compared with 2015, from 512,278 to 237,750, the federal tax agency said. Similarly, IRS data showed a nearly 50% drop, from 1.2 million to 787,000, in the number of confirmed fraudulent tax returns that made it into the agency’s tax return processing systems.”
In short, that’s a very good sign for both the taxpayers and the IRS. Too often, individuals discover they’ve been the victim of tax refund fraud only after their legitimate returns are rejected for being duplicates.
It’s important that consumers not become too reliant on the new IRS changes, though. Minimizing identity theft and fraud is an ongoing process, one that everyone has to take part in. It’s still important for taxpayers to file as early as possible in order to get their returns in ahead of a scammer. It’s also critical—especially if you’ve been notified in the past that your personally identifiable information has been compromised in a data breach or identity theft crime—to monitor your account statements, credit report, and online accounts regularly for any signs of suspicious activity.
Anyone can be a victim of identity theft. If you believe your identity has been stolen or your personal data has been compromised, connect with the ITRC through our toll-free call center at (888) 400-5530 or the new IDTheftHelp app for iOS and Android.