With more and more resources shifting to online and cloud-based resources – particularly in an environment that is embracing remote work options – minimizing fraud and enhancing cybersecurity standards are imperative. This includes taxpayers as they begin to eye the preparation and filing of their returns next year.
One simple fix has the potential to not only offer more protection from potential cybercrimes like identity theft, but also spur greater adoption of online services, such as new digital taxpayer accounts unveiled by the IRS.
Consider that there is increasing evidence suggesting a portion of taxpayers who are eligible for a refund have little to no interest in receiving that refund in a rapid fashion. Because of this, one interesting move for the IRS to consider would be giving taxpayers the ability to “lock” themselves out of getting a potential refund and, instead, apply any refund toward the next year’s estimated tax payment.
This proposal initially was designed to be a tool in the broader cybersecurity toolbox for the IRS. Cyberthieves regularly mine the internet hoping to access Social Security numbers and other personal information, using this data to either hack accounts directly or sell this information on the dark web to individuals who could, in turn, file fraudulent tax returns seeking large refunds.
Accounting practitioners and financial advisory services are especially at-risk for this type of crime given that they often have large databases full of confidential information. If hackers could access those databases, they’d have potentially hundreds of Social Security numbers to exploit.
Taxpayers with their information stolen would attempt to file their own returns, only to find out their refunds already have been claimed by a cyberthief. By giving taxpayers the power to lock his or her account, the potential cyberthieves are cut off from the ability to collect any money from their fraudulent claim.
This benefits those taxpayers who aren’t getting a refund anyway, and it also incentivizes practitioners to encourage their customer bases to lock their accounts as well. This, in turn, protects the federal government from issuing fraudulent refunds they can’t get back.
However, this level of protection and taxpayer control also might help spur the adoption of these taxpayer accounts which were recently rolled out by the IRS. If taxpayers know they’re able to lock their accounts and minimize the impact of identity theft, they’ll be more likely to explore setting one up.
This is just one small step that can be taken to stem the tide of cybercrime. PADGETT BUSINESS SERVICES® has long been engaged with elected representatives and government officials, working to advocate on behalf of small businesses and taxpayers. If you’d like to learn more about how we could support the work of your small business, don’t hesitate to reach out to one of our offices.