New IRS Tax Fraud Laws

Most people think of the IRS as being this “perfect” federal body that is incapable of making mistakes. However, that’s not necessarily true! In fact, recently, the IRS accidentally sent out a large number of refunds to people who had been flagged for possibly having fraudulent returns. This was all due to a computer glitch, but, regardless, the mistake got the IRS to crack down on tax fraud and invent some new laws related to it.

These laws were passed under what is known as the Protecting Americans from Tax Hikes (PATH) Act. The Act went into effect for taxpayers in 2016 , and it’s important to understand the related laws and how they might affect you.   

Tax Credits

First of all, the PATH act has made it so that two refundable tax credits, the Earned Income Tax Credit and the Additional Child Tax Credit, are delayed. Since these credits are very vulnerable to fraudulent filing, the IRS now takes the extra time to ensure only those who are truly entitled to these credits receive them. So, if you’re banking on these credits, don’t be surprised if you receive them a little later than usual.

Individual Taxpayer Identification Numbers

Another change that the act has brought about relates to people who do not have social security numbers and who, instead, have individual taxpayer identification numbers (ITINs). These people now have to face the fact that their ITINs become invalid if they don’t use them to file a return within three years. Those whose ITINs become invalid will have to renew their numbers through the IRS before they can use them again

The Security Summit Initiative

Finally, you should know that the IRS has partnered with major tax companies to reduce the risk of identity theft via taxes. Under measures known as the Security Summit Initiative, the IRS has made it a whole lot harder for thieves to steal the information of taxpayers. You’ll likely notice these effects by more stringent password requirements, extensive identity checking, and getting locked out of your account when you enter wrong information on tax related sites.

As you can see, the IRS isn’t taking any chances when it comes to identity theft! And, while some of the changes that have been implemented may cause small annoyances in your life, remember the IRS is doing it all for your own good!