American Businesses At Risk Of Identity Theft Under IRS’s Watch

11.11.2015 | Surge Wire |

The Internal Revenue Service is failing to do all it can to detect and prevent business identity-theft, a report released Tuesday by the Treasury Inspector General for Tax Administration says.

While the IRS said it’s making strides to try and prevent unauthorized individuals from using businesses’ identifying information to claim tax benefits, the audit found shortcomings in the agency’s efficiency in identifying suspicious filings.

According to the report, the agency has a system in place to detect questionable employer identification numbers (EIN), yet 233 returns were filed in 2014 using flagged EINs associated with fake businesses, with 97 of them receiving more than $2.5 million in refunds. The Treasury Inspector General for Tax Administration (TIGTA) said the agency should improve its processing filters so funds aren’t issued to fraudulent returns.

The agency has sharing agreements with 19 states, but the agreements only pertain to individual — not business — tax returns. The IRS said it has implemented a pilot program and is collecting data to test whether circulating select information is a successful tactic to stop fraud.

“When we brought this issue to IRS management’s attention, they indicated that before they can share such information, they will need to justify the ‘need for and use of’ such data with the IRS Disclosure Office,” the report says.

TIGTA also said the IRS should be doing more to draw awareness to business identity-theft, claiming there is minimal information available for businesses to know how to best protect themselves.

“Identity theft continues to be a serious and evolving issue which has a significant impact on tax administration,” J. Russell George, Treasury Inspector General for Tax Administration, said in a statement. “It not only affects individuals, it can also affect businesses. Therefore, it is incumbent upon the IRS to use all the data and tools to detect and prevent business identity theft from occurring.”

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