A recent article from The Wall Street Journal explores new measures taken by the Internal Revenue Service (IRS) to ensure consumers do not fall victim to tax fraud, but this safety comes at a cost.
In 2015, IRS commissioner John Koskinen led a group of “federal, state and tax-prep industry officials” in a working group called the “Security Summit” with the goal of quickly identifying, communicating, and acting on emerging fraudulent activity. In addition to these measures, tax preparation firms have worked directly with consumers to ensure they incorporate strong passwords and two-factor authentication when preparing their tax returns.
The additional vigilance from federal and state government as well as private industry has helped reduce the instances of tax fraud in 2016, to 376,000 from the 766,000 incidents the year before.
Although these measures have ensured better taxpayer safety, they have generated an instance of “false-positives” for tax fraud. This has caused the delay of 1.2 million legitimate refunds totaling over $9 billion in value. The delay in refunds has had an impact on the U.S. economy, such as the lower recorded consumer spending in the month of February. For some, these returns have serious effects on their planned spending, which in turn depressed consumer spending for the month of February.
Read more at The Wall Street Journal.