IRS identity theft prevention initiative examined

The Government Accountability Office (GAO) has issued a pair of recommendations to the Internal Revenue Service (IRS) as a means of bolstering the agency’s identity theft preventive efforts.

The IRS launched an Identity Theft Tax Refund Fraud Information Sharing and Analysis Center (ISAC) pilot for the 2017 filing season, which was designed to allow the IRS, states, and tax preparation industry partners to quickly share information on identity theft (IDT) refund fraud.

GAO officials assessed how well the initiative aligned with five leading practices for pilot design and recommended the IRS and the initiative’s Executive Board take steps to improve the pilot’s implementation and develop a plan to expand membership to more states and tax industry members. Currently, 31 states and 17 industry groups serve as participants.

The GAO said the ISAC pilot includes two components: an online platform run by the IRS to communicate data on suspected fraud, and an ISAC Partnership, a collaborative organization comprised of IRS, states, and industry, which is intended to be the governance structure.

Based upon its analysis, GAO officials have recommended the IRS establish criteria for assessing whether objectives have been met before making decisions about scalability and whether, how and when to when to proceed to full implementation while developing a data analysis plan identifying data sources and criteria necessary for effectively evaluating the pilot.

The GAO said the second recommendation involves the Acting Commissioner of Internal Revenue ensuring the ISAC Partnership develops an outreach plan to expand membership and improve states’ and industry partners’ understanding of the ISAC’s benefits.