Senate Finance chair said tax fraud ‘must stop’

Senate Finance Committee Chairman Orrin Hatch (R-Utah) said taxpayers must be better protected from tax fraud.

During a committee hearing Thursday, Timothy Camus, deputy inspector general for investigations at the Treasury Inspector General for Tax Administration, said tax identity theft and phone impersonation scams are two of the most pervasive ways criminals are scamming taxpayers this filing season.

The highest amount that a phone scammer took from one individual was over $500,000, he said.

And though the IRS is trying to improve its identification of identity theft tax returns, Camus said the agency lacks timely access to third-party income and withholding information.

“Most of the third-party income and withholding information is not received by the IRS until well after taxpayers begin filing their tax returns,” he said. “For example, the deadline for filing most third-party information returns with the IRS is March 31, yet taxpayers began filing their tax returns for the 2015 Filing Season on January 20th.”

In order to accelerate the filing deadline, he said, legislation is needed.

John Valentine, chairman of the Utah State Tax Commission, recommended Congress strengthen information sharing between the IRS and states; create stricter regulations for prepaid debit cards; prohibit the practice of applying refunds to payment of fees for filing services, a practice called “refund transfer; and require third-party filing services to tighten front end security by using multifactor authentication and other measures to secure data from unauthorized disclosure and identity theft.