IRS Announces Effort To Fight Fraudulent Tax Returns

The Internal Revenue Service, hoping to reduce the number of fraudulent tax returns filed each year, says it's partnering with several tax preparation and software firms in an effort to protect taxpayers.

The initiative, announced by IRS Commissioner John Koskinen, will include steps the IRS believes will better authenticate the identity of taxpayers and the information included on tax return submissions.

Last month the IRS acknowledged that hackers had stolen personal information, including back tax data, of some 104,000 taxpayers. According to the AP, the IRS estimates it paid out some $5.8 billion in fraudulent tax refunds in 2013.

Koskinen said IRS filters stopped some 700,000 fraudulent returns "at the door" this year, but it's not clear yet how many got through.

Koskinen appeared at a briefing along with executives from several tax software firms including Intuit (maker of TurboTax), H&R Block and Tax Act.

The IRS says the new initiatives include:

• Reviewing the transmission of the tax return, including the improper and or repetitive use of Internet protocol numbers, the Internet "address" from which the return is originating.
• Reviewing computer device identification data tied to the return's origin.
• Reviewing the time it takes to complete a tax return, so computer mechanized fraud can be detected.
• Capturing metadata in the computer transaction that will allow review for identity-theft-related fraud.

Koskinen says the changes should go unnoticed by most taxpayers and should be ready in time for next year's tax filing season.