Firms Could Be Forced to Disgorge Profits from Tax Refund Fraud
Summary: Utah halted all tax refunds for two weeks in 2015 after its anti-fraud analytics flagged what turned out to be ten times the refund fraud it had seen in any prior year, with phony 2014 returns copying each victim's 2013 return except for the bank routing and account numbers. Utah State Tax Commission chair John Valentine said tax preparation firms will have to move to two-factor authentication, and he warned that under general legal principles those firms could face disgorgement of fees earned on fraudulent returns.
Bottom line: Refund fraud is a $6 billion a year problem, and the IRS's own 'get transcript' service was used to pull tax data on more than 100,000 citizens, stealing tens of millions from the Treasury. Valentine's message to vendors is blunt: if he were their general counsel, he would assume exposure for disgorgement of fees from fraudulent returns and clean it up immediately.
Read the original at Krebs on Security ↗
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