A Deeper Dive into this New IRS Collaboration with the Tax Industry to Protect Taxpayers from Fraud
The IRS initiative to combat tax scams is part of a new joint effort aimed at protecting taxpayers from fraud. As identity theft cases rise, the IRS has launched the Coalition Against Scam and Scheme Threats (CASST) to improve the fight against these growing threats.
Rising Cases of Identity Theft
In the 2024 filing season, the IRS confirmed 15,242 fraudulent returns, amounting to more than $180 million in refunds claimed by scammers. This represents a significant 20% increase from the 2023 filing season, highlighting the urgent need for the IRS initiative to combat tax scams.
The IRS’s Identity Theft Victims Assistance unit received over 294,000 identity theft reports in 2023, the second-highest in five years. These alarming statistics have prompted the IRS to take stronger action to protect both taxpayers and the integrity of the tax system.
What is the CASST Initiative?
At the core of the IRS initiative to combat tax scams is the CASST task force. Convened by IRS Commissioner Danny Werfel, CASST aims to develop new ways to prevent fraudulent returns from being filed. It will also enhance taxpayer education about common scams and create infrastructure improvements to protect federal, state, and industry tax systems.
Collaboration Across the Tax Industry
The CASST initiative is backed by over 60 organizations, including major tech firms and tax professional associations like the American Coalition for Taxpayer Rights and the National Association of Computerized Tax Processors. These partnerships will enable the IRS initiative to combat tax scams to make structural improvements ahead of the 2025 filing season.
Addressing Common Tax Scams
Several scams have emerged in recent months, targeting both taxpayers and the tax system:
- Ghost Preparers: Fake tax preparers who file fraudulent returns for taxpayers, claiming credits or benefits they do not qualify for. These preparers often disappear after collecting hefty fees, leaving taxpayers responsible for any penalties or audits.
- Fake Charities: Scammers posing as charitable organizations, especially in times of disaster, to trick well-meaning taxpayers into donating money or providing personal information.
- Phishing Scams: Fraudulent emails and websites designed to steal personal information or install malware on taxpayers’ devices. The IRS has warned people not to click on unsolicited links claiming to be from the agency.
- Fraudulent Refund Claims: Scammers encourage taxpayers to claim credits they aren’t eligible for, such as the fuel tax credit, leading to delayed refunds and potential penalties.
Protecting Yourself from Tax Scams
The IRS initiative to combat tax scams offers several ways to help taxpayers safeguard themselves:
- Be wary of unsolicited emails or phone calls claiming to be from the IRS.
- Use caution when donating to charities and ensure they are legitimate organizations.
- Get an Identity Protection PIN (IP PIN): This is a free service offered by the IRS to protect your identity when filing taxes.
CASST’s Long-Term Goals
One of the CASST initiative’s main goals is to implement new safeguards by the 2025 filing season. The task force is working to improve validation for Preparer Tax Identification Numbers (PTINs) and Electronic Filing Identification Numbers (EFINs). Strengthening these systems will make it harder for scammers to exploit the tax system.
By developing stronger fraud prevention systems, the IRS initiative to combat tax scams aims to stop scammers in their tracks and protect taxpayers from financial harm.
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