Security Summit Celebrates
Accomplishments, Looks to Future

By Alice P. Jacobsohn, Esq.

The American Payroll Association Government Relations staff attended the IRS leadership meeting of the Security Summit in Washington, D.C., on June 28. Also in attendance were C-suite representatives from taxpayer service providers, staff from other professional associations, representatives from state taxation and revenue departments, and senior-level staff at the IRS. Those included Commissioner John Koskinen, Deputy Commissioner for Services and Enforcement John Dalrymple, Chief of Communications and Liaison Terry Lemons, and Director of Return Integrity and Compliance Services Ken Corbin.

Commissioner Talks About Success

Koskinen opened the meeting highlighting the successes of the Security Summit and the diversity of participants in the process. He stated that the group's efforts to develop stronger ways to authenticate taxpayers are making a difference in reducing fraud cases, but that the battle is ongoing.

"We have made significant progress ... over the last year, but much more work remains," he said. "Taxpayer fraud and identity theft numbers are down, but we can't yet tell whether the numbers are significant."

Because of the Security Summit, from January through the beginning of May, the IRS reviewed 36,000 suspicious returns and $148 million in refund claims, which is double the effort from 2015 during the same period. The IRS experienced a 48% drop in receipts, including Identity Theft Affidavits (Form 14039), through the agency's Identity Theft Victim Assistance function. Suspicious refunds returned to the IRS from banks and financial institutions dropped by 66%.

The Commissioner seemed particularly pleased about the IRS's new rapid response team, which alerts the IRS, industry, and states about emerging problems, often within 24 to 48 hours of notice. APA received and distributed to members some of these alerts regarding scams through payroll, including an email asking for Form W-2 files.

Security Summit Plans for 2017

Commissioner Koskinen emphasized that a big problem for the IRS and its Security Summit partners is that methods used this year to prevent identity theft may be ineffective next year because thieves adapt constantly. Some pilot programs worked well and will be expanded in 2017. These include the W-2 Verification Code test that will cover approximately 50 million forms in 2017. In this pilot program, taxpayers and tax preparers are prompted through their tax software to enter a unique 16-digit code.

Other Initiatives for 2017 Involve:

  • Identifying other data elements from tax returns that can improve authentication of taxpayers
  • Launching the Identity Theft Tax Refund Fraud Information Sharing and Analysis Center
  • Expanding the Security Summit's "Taxes. Security. Together." Awareness campaign
  • Creating a process for financial institutions to identify questionable state tax refunds and return them to states for validation (to date 23 states have agreed to participate).
Security Summit Infrastructure Changes

In addition, the IRS is looking to add legitimacy to the Security Summit by changing the charter for the Electronic Tax Administration Advisory Committee (ETAAC), established by the U.S. Congress under the Internal Revenue Service Restructuring and Reform Act of 1998. ETAAC's role is to provide the IRS with input on the agency's strategic plan for electronic administration and annually report its recommendations to Congress. The Security Summit is a working group formed by the IRS, not by Congress, to address identity theft and tax fraud. By operating under ETAAC (effective July 1, 2016), the Security Summit gains a relationship with Congress that the IRS believes will allow participants to act more secretively to prevent thieves from gaining access to security initiatives. This approach also has the potential to make the Security Summit more permanent because future presidents and IRS leaders may not be able to disband the group without congressional action. That said, Koskinen stated that the IRS is not seeking a bureaucratic approach to the Security Summit's infrastructure. While participants on ETAAC must undergo a formal application and approval process, this vetting is not planned for Security Summit participants.

Implementing the PATH Act

When asked how the IRS plans to implement the Protecting Americans from Tax Hikes (PATH) Act of 2015, Koskinen said the IRS is focused on receiving Forms W-2 from employers after they have been filed with the Social Security Administration by the now-required earlier deadline of January 31. Part of this effort means more outreach to employers to ensure that they are aware of the new deadline. The second step is to verify the accuracy of Forms W-2 and take advantage of the earlier deadline to verify taxpayers while still issuing refunds in a timely manner. However, while the Security Summit recommended the earlier deadline, none of the implementing activities are subject to Security Summit consideration.

Ensuring a Voice for Payroll Professionals

Before the meeting ended, APA staff thanked the IRS leadership for involving APA in preventing identity theft and tax fraud. "We are pleased to have payroll professionals involved," Koskinen replied. Moving forward, APA will have three representatives on Security Summit subcommittees. Andrew McDevitt, CIPM, CIPP/E/G/US, CTPRP, a Senior Privacy Consultant with Truste, will serve on the Authentication group. Stephanie McAtee, CPP, Payroll Director for the McLane Company, Inc., will serve on the Information Sharing group. Stephanie Salavejus, CPP, Vice President and Chief Operating Officer of PenSoft, will serve on the Strategic Threat Assessment and Response (STAR) working group. APA members participating on the Government Relations Task Force Subcommittee on IRS Issues will receive periodic updates from APA's representatives.

Alice P. Jacobsohn, Esq., is Senior Manager of Government Relations for the American Payroll Association.

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