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The Resource Center Identity Theft & Protection The Resource Center | article

IRS Gets Funding To Stop ID Theft

The IRS will receive an additional $290 million in funding next year to combat identity theft.The Internal Revenue Service (IRS) will get an additional $290 million in funds in 2016, thanks to the new omnibus spending bill signed by the U.S. Senate. The catch is this boost in the budget must be spent on improving or creating taxpayer services and fighting against tax-related identity theft.

The news comes after a series of budget cuts for the IRS, leading to poor customer service. The Obama administration originally tried to rectify these issues by seeking $2 billion in additional funding for the agency.

Instead, the new budget is enforcing what’s being called the “Protecting Americans from Tax Hikes Act of 2015,” which will only allow $290 million specifically for improved customer service, such as making sure questions are responded to in a timely manner, and to better detect and prevent tax-related fraud. However, this budget increase isn’t purported to be nearly enough for what the IRS needs to accomplish.

“While the bill contains a modest increase in IRS funding, the IRS budget would still be well below the level the agency needs to provide the kind of quality service the American people deserve,” Treasury Secretary Jack Lew said in a statement. “Fully funding the IRS is important for individual taxpayers, the security of our data, and our ability to collect the revenue our country needs.”

The IRS recently came under fire when it proposed that nonprofit organizations require more information about donors that contribute $250 or more. The problem is the IRS was asking for sensitive information such as name, address and Social Security Number, all of which could lead to ID theft . While it remains a voluntary option for nonprofits, an op-ed in the Wall Street Journal argued that the extra step often leads to mandatory requirements.

Many critics of the proposal fear that it can deter donations to political nonprofits, but the Huffington Post recently emphasized security as the more important issue at hand. In the wake of the data breach against the Office of Personnel Management, the Huffington Post points out how the security of any federal agency should be questioned, calling the IRS proposal “misguided and terrifying.”

Last tax season, the IRS paid out an estimated $5.8 billion in fraudulent refunds, but that’s only for fraud cases it knows of. Realistically, that number could be much higher. Earlier in the year, the IRS announced plans to help reduce the amount of tax fraud by providing better information to taxpayers and by teaming up with state tax administrators and companies in the tax industry to improve their own security measures. The agency’s first plan of action was to create stronger authentication measures that would hopefully weed out any fraudsters. The IRS said it was prompted to make these changes after reporting a significant rise in phone tax scams and attempts by criminals to steal taxpayers’ identities and refunds.

If you’re concerned about your vulnerability to identity theft this tax season, invest in a credit monitoring service. It’s a great way not only to keep track of your credit for big purchases such as a home or a car, but also great for detecting identity theft. Credit monitoring services can alert you to certain activity in your credit files that may indicate fraud.

And remember, the best thing you can do to protect yourself against tax fraud is to file early. While credit monitoring is important, filing early will lock a potential fraudster out of your tax refund.