The IRS has taken many hits over the years (we’ll reserve judgment on wha's deserved and wha's not), but for once the tax agency is earning praise. The Associated Press reports that the White House has included in its proposed 2014 budget several items to assist the IRS in its fight against identity theft and tax fraud. Foremost among them, the IRS would be able to slap criminals who file fraudulent returns with a $5,000 civil penalty per incidence and “[increase] criminal sentences for those convicted of tax-related identity theft.”
This can only be good news. According to the Taxpayer Advocate Service (TAS)—a division that is within the IRS but independent of the agency—i's about time for an IRS smackdown. According to the TAS, tax-related identity theft shot up 78 percent in 2012 and 650 percent since 2008, and the IRS has nearly 650,000 unresolved cases in its pipeline. Any new weapon in the governmen's arsenal is going to help, and these measures tell criminals that the fight is about to get serious. (For the other tax-fraud nerds out there: The TAS’s Twitter feed is a great source of information—and a healthy dose of IRS hand-slapping, which is always good for a midday pick-me-up.)
The proposed budget also allows for better protection of the Social Security Administration’s Death Master File, which lists nearly 90 million deceased Americans. The list is meant to provide financial and other institutions with a way to verify that someone has died and to prevent fraud. Criminals, however, have successfully used this list for just the opposite—to access the Social Security numbers of deceased individuals and use them for identity theft. According to The AP, under the new measures, the files will be “available immediately only to those who legitimately need the information for fraud prevention purposes. All other users would have to wait three years for access.”
Lastly, the proposed budget would make that W-2 form something less than a blank check with your name on it. The revised form would include an “identifying number,” rather than an SSN.
The IRS has upped its game in recent years. The agency reports that it prevented $20 billion in fraudulent refunds from going out in 2012, compared with $14 billion in 2011, and they’ve trained 35,000 employees to help spot identity theft cases. Hopefully these new measures will help taxpayers suffering from delayed returns and financial hardship, and redefine an agency tha's traditionally about as popular as the dentist—and about as useful in a fight.