Believe it or not, tax frauds have been pretty common in the US tax premise, with fraudsters gaining access to sensitive tax files and information. Once acquired, they submit the same to the IRS and get the tax refunds, thereby funneling billions of dollars in the process over time. Based on estimates and projections released by the IRS, almost 5 million filings in 2013 alone were unscrupulous and fraudulent, resulting in falsified claim refunds amounting to 30 billion dollars.
How tax fraud takes place
On the first day of filing, millions of Americans will flock to submit their federal tax returns. Unfortunately, cyberattacks are one of the biggest burdens for the IRS, which means that taxpayers will be at risk of identity theft and financial fraud during the filing season. Cyberattacks allow fraudsters into the confidential data repositories that store employer forms, credit files, and personal financial data. Once they have access to the information, they are free to submit tax files directly on the IRS platform while redirecting refunds to the requisite accounts. As the information is just duplicated and not stolen, the concerned person often has no idea that his or her tax refunds have already been collected.
Only when the IRS platform rejects submissions, the concerned individuals understand that fraudsters have beaten them to the refunds. However, after years of denial regarding unattended and fraudulent cash funneling, the Internal Revenue Service has finally come up with an impactful and relevant solution to the problem.
Pin protection for taxpayers
What was more of an optional appeal resulting out of ID thefts, affidavits, and tax fraud experiences has now been made available to almost every taxpayer as a proactive, preventative strategy. Better termed as the IP PIN or the Identity Protection PIN, this code can easily block out the identity thieves and fraudsters in case they try to submit tax returns on your behalf.
This single-use PIN will be available to every taxpayer starting mid-January 2021, provided a request is put up. Besides, the six-digit code only comes with a year-long validity. In addition to making this code available, the IRS has also modified the tax return filing scenario by envisioning a multi-factor authentication platform.
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