Due to the IRS budget cuts, the confusion regarding the new tax law, and the vast amount of data compromised, the filing season for 2017 may be rampant with tax-related crimes. There were 787,000 identity theft returns confirmed and stopped by the IRS last year. The total exceeded $4 billion. The IRS projected a $21 billion loss in 2016 for fraud.
Everything changed when the Equifax breach compromised 143 million individuals. The breach compromised social security numbers, and increased the threat of identity theft over previous years. The threat of tax-related fraud in 2017 is severe, and the IRS is unable to handle this threat as well as they did last year. The IRS has had their hands full since the new tax bill was passed by Congress.
As the new tax years starts, the IRS is already scrambling to find applications capable of handling the numerous changes Congress passed in the tax code. The new bill has distinct logistical challenges including the coding designed to adjust withholdings. The IRS is hopeful this change will be implemented on pay stubs by the beginning of February.
Many of the provisions are already effective, including the deductions for healthcare, and numerous small changes which require the immediate attention of a staff that has been greatly diminished.
In 2010, the cuts caused the agency to lose $900 million, and caused 21,000 jobs to be lost. Once again, this has become a major issue. The last time the nation witnessed a tax overhaul similar to this one cable television was still new to the suburbs, and the radio was playing Walk Like an Egyptian. The state of the IRS due to the new tax bill makes identity theft a serious concern.
A budget increase was given to the IRS in 1986 so the additional workload could be accomplished effectively. This time, the appropriation bills from the Senate and the House for 2018 will cut the budget of the IRS between $124 and $155 million.
Last year, the wait times exceeded an hour. People need the helpline because they do not read the tax bills. There will be a lot more calls than usual, there will be a wide variety of topics, and people will be calling to express their reactions to information that was bad, good and neutral.
The most important question in the current climate is how to prevent becoming a victim of identity theft or tax-related fraud. The best answer for identity theft protection is to file tax returns as soon as possible. It is important to become familiar with the changes coming to the tax code of the nation. It is critical to understand that people have become confused, and this creates the perfect atmosphere for fraud.
The only current solution is to get to the punch ahead of the scammers. There is a lot required for the IRS to continue to function well, and issues with the budget will surface. Concern must be expressed regarding the ability of the IRS to protect taxpayers from fraud. The environment has become hostile, and people must take the necessary steps to protect themselves.