IR-2017-123, July 25, 2017
WASHINGTON – The IRS, state tax agencies and the tax industry have made significant progress in the past two years against tax-related identity theft aimed at individuals but warned business identity theft is on the upswing.
Some of the increase in business and partnership return identity theft is fueled by cybercriminals' increasing focus on breaching tax professionals systems and stealing client data. The Security Summit has launched a 10-week awareness campaign called “Don't Take the Bait," which encourages tax professionals to step up their security measures.
“The IRS, state tax agencies and the tax community have worked hard to turn the tide against tax-related identity theft. We're making progress in protecting individuals but we still have more work to do, especially in the business tax area and involving tax professionals. Continued lapses in simple security measures can happen in tax professional offices and other business as well as at home," said John Koskinen, IRS Commissioner.
So far for 2017, individuals reporting identity theft have declined sharply compared to the same time in 2016 and 2015. In the first five months of 2017, about 107,000 taxpayers reported being victims of identity theft, compared to the same period in 2016, when 204,000 filed victim reports. That's about 97,000 fewer victims – representing a drop of 47 percent. For comparison, there were nearly 297,000 identity theft victims during the first five months of 2015.
The decline is part of an ongoing trend that began in 2016 as Security Summit safeguards were put in place.
However, the IRS also saw an increase in identity theft involving business-related tax returns. So far for 2017, the IRS has identified approximately 10,000 business returns as potential identity theft through June 1, compared to about 4,000 for calendar year 2016 and 350 for calendar year 2015. While the number of businesses affected was relatively low, the potential dollar amounts were significant: $137 million for 2017, $268 million for 2016 and $122 million for 2015.
The affected returns included corporate returns (Forms 1120 and 1120S) and estate and trust returns (Form 1041). There also was an increase in identity theft related to the Schedule K-1 filings made by partnerships. Tax preparers will see new trusted customer questions on these types of returns. (See Fact Sheet 2017-10, Information about Identity Theft Involving Businesses, Partnerships and Estates and Trusts.)