A coalition comprising the IRS, state tax agencies and dozens of groups representing the nation’s tax industry has announced a new joint effort to combat the growth of scams and schemes threatening taxpayers and tax systems.
The new task force, Coalition Against Scam and Scheme Threats (CASST), began in response to a variety of increased scams and schemes that intensified during the past filing season that aimed to exploit vulnerable taxpayers while enriching fraudsters and promoters, the IRS said. Convened at the request of IRS Commissioner Danny Werfel, the coalition of federal and state tax agencies, software and financial companies, as well as key national tax professional associations, agreed to a three-pronged approach.
They will work to expand outreach and education about emerging scams; develop new approaches to identify potentially fraudulent returns at the point of filing; and create infrastructure improvements to protect taxpayers as well as federal, state and industry tax systems.
“Across the spectrum of the tax system, we’ve seen a rising tide of scams and schemes that try to exploit taxpayers and find gaps in government and industry defenses,” said Werfel. “This new collaborative approach will allow the private and public sectors to throw our combined weight against this threat. We will do more to work closely together, share information faster, respond quickly to threats and quickly alert the public to new and emerging threats. Our goal is to have a mass effect on this expanding problem that’s spread on social media and through bad actors.”
The IRS pointed out that CASST will not replace its Security Summit effort, which was launched in 2015 by the same groups to stem the growth in tax-related identity theft. Though the coalition will be closely modeled on the Security Summit, its purpose will be to protect taxpayers from falling prey to unscrupulous actors by leveraging multilateral relationships across the tax ecosystem to minimize the filing of fraudulent tax returns.
The Security Summit highlights numerous scams and schemes circulating on social media in its annual IRS Dirty Dozen list. The new approach will increase collaborative efforts to raise awareness and education about schemes, not just during tax season but throughout the year.
During the past tax season, the IRS said that it saw hundreds of thousands of dubious claims in which it appears that taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and the need for taxpayers to show they have legitimate documentation to support these claims.
With the new scam and scheme initiatives, the coalition will work to put in place new protections by filing season 2025. The combined effort is particularly important because the group has seen instances where scammers look for weak points in government systems and the private sector to exploit. The combined effort will improve defenses across both the private and public sector, with a goal of making it more difficult for scammers to slip improper or false tax returns through the system.
The group will also work to make long-term structural changes to fundamentally improve the ability to identify and stop scams. This includes working to improve Electronic Filing Identification Number (EFIN) and Preparer Tax Identification Number (PTIN) validation and new steps to combat “ghost preparers,” who prepare tax returns for a fee and do not in any way sign a tax return or disclose their role on the tax return as the preparer. Such tax returns often include claims for improper tax refunds that lead to millions in revenue loss, and they add risk for taxpayers who file the returns because only the individual filers' names are associated with the tax return.