The IRS, state tax agencies, and the tax industry announced the annual campaign to raise awareness among tax professionals about data security. Continuing an effort to battle tax-related identity theft, the 2021 campaign begins as the number of data thefts reported by tax professionals to the IRS continued to climb. There have been 222 data theft reports this year from tax professionals to the IRS as of June 3, 2021, outpacing the rate of 211 in 2020 and 124 in 2019. Each report can impact hundreds of taxpayers and threaten the tax professional’s business.
Identity thieves and fraudsters were especially active last year and this year as they used the COVID-19 pandemic, the nationwide teleworking practices, and the economic downturn as fuel for a variety of scams and schemes to steal money and identities. Further, tax professionals have been key targets of criminal syndicates that are tech-savvy, tax-savvy, and well-funded. These scammers either trick or hack their way into tax professionals’ computer systems to access client data. They use stolen data to file fraudulent tax returns that make it more difficult for the IRS and the states to detect because the fraudulent returns use real financial information.
The Security Summit was formed in 2015 to “take its own shot” at fighting against identity theft. The Summit partners made great inroads against tax-related identity theft, dramatically reducing confirmed identity theft returns and saving billions in tax dollars. During the next five weeks, the Security Summit partners aim to highlight a series of simple actions that tax professionals can take to better protect client data from theft. Some of the recommendations made by the Security Summit to tackle identity theft include:
- Using a multi-factor authentication to protect tax preparation software accounts.
- Signing up clients for Identity Protection PINs. The IRS now offers IP PINs to all taxpayers who can verify their identities online, on the phone with an IRS employee after filing a Form 15227, or in person.
- Helping clients fight unemployment compensation fraud.
- Avoiding spear phishing scams. Thieves take time to craft personalized emails to entice tax professionals to open a link embedded in the email or open an attachment. For 2020, tax pros were especially vulnerable to spear phishing scams from thieves posing as potential clients.
- Knowing the signs of identity theft. There are many signs that tax pros should be aware of such as multiple clients suddenly receiving IRS letters requesting confirmation that they filed a tax return deemed suspicious. Tax professionals may see e-file acknowledgments for far more tax returns than they filed. Computer cursors may move seemingly on their own.
More information on these tips will be available every Tuesday over the five-week period that began July 20. Moreover, the summer series also coincides with the annual IRS Nationwide Tax Forums, which are being held virtually this summer. The 2021 Forums feature three webinars focused on cyber- and information security that will be live streamed as follows:
- “Cybersecurity for Tax Professionals – Advanced Session,” presented by the American Coalition for Taxpayer Rights, July 28 at 2 p.m. ET.
- “Helping You and Your Clients Steer Clear of Fraud and Scams,” presented by the Treasury Inspector General for Tax Administration, Aug. 4 at 11 a.m. ET.
- “IRS Criminal Investigation: Deeper Dive into Emerging Cyber Crimes and Crypto Tax Compliance,,” Aug. 5 at 11 a.m. ET.
Finally, taxpayers can find more information about the IRS Nationwide Tax Forum at www.IRSTaxForum.com.