Thank you all for joining us. We’re here today to give you an update on the progress of the Security Summit Group. We’re also announcing a new and important phase of this group’s ongoing efforts to protect taxpayers and the tax system against stolen identity refund fraud. Joining me today are Summit Group members representing the electronic tax industry, the software industry and state tax commissioners. They all have been critical partners in the Security Summit Group since we created it in March of last year. The bottom line for taxpayers is that the IRS and the states, with the help of the tax industry, are stopping more suspicious tax returns at the door, and we’re preventing more fraudulent refunds from being issued. The Security Summit effort is making a difference. The effort has helped protect taxpayers, keeping more of their money out of the hands of criminals. In our first year, the Security Summit Group focused on making sure filing taxes would be safer and more secure for taxpayers. For example, the group developed stronger ways to authenticate taxpayers when filing their returns this year. For people who used tax software, this included new sign-in protocols to access their accounts and stronger password requirements. Many other new safeguards put in place for the 2016 filing season were invisible to taxpayers. For example, Summit Group members agreed to share numerous data components from tax returns, as well as information leads, to improve fraud detection. Industry partners also agreed to work together and align under common security standards. And we launched the so-called “rapid response” team to alert the IRS, industry and state partners of emerging issues, often within 24 to 48 hours. What’s unique about these efforts – and this goes to the heart of the Security Summit’s importance – is the way we’ve been mobilizing and increasing the flow of information to detect fraud. At a basic level, protecting taxpayers and their refunds means having timely, meaningful and reliable information. We’re now doing this more than ever before. The hard work of the Summit Group has been done by our seven subgroups. When we started out, we just had three: One focused on authentication, a second on information sharing and a third on cybersecurity. But we realized there were other areas that needed to be addressed, so we created additional teams – for tax professionals, financial services and public communications. And we also created one to help establish the new Identity Theft Tax Refund Fraud Information Sharing and Analysis Center, or ISAC, which I’ll talk more about in just a moment. I want to express my deep appreciation to everyone participating in the Summit subgroups, because they’ve worked together amazingly well. To borrow a line from Bernie McKay of Intuit, “These teams fit together like pieces of a jigsaw puzzle." As a result of their efforts, we have already seen concrete results from the filing season that ended in April. One great example involves our industry leads program. Under this program, Security Summit partners – and other external groups such as banks – provide information that helps the IRS improve our internal refund fraud filters. This in turn leads to more suspicious tax returns being identified for further review. This year through May 8th, leads from industry partners directly resulted in the suspension of 36,000 tax returns, on which a total of $148 million in refunds was claimed. That’s more than twice what was identified by industry leads through May 8th of last year – 15,000 returns claiming $98 million. That’s protecting $50 million more of taxpayer money. There also have been other indicators showing we’re moving in the right direction. For example, the number of people who have filed affidavits with us to tell us they were victims of identity theft has dropped significantly in the first half of this year compared to the first half of 2015 – it’s down more than 40 percent. Also, the number of suspicious refunds that financial institutions returned to the IRS for review was 66 percent lower through mid-June of this year compared with the same period last year. That’s more evidence our fraud filters are getting better and stopping more false returns before refunds can be issued. Taken together, all the efforts of the Security Summit Group have had a noticeable impact on our ability to fight refund fraud. This year through April, the IRS stopped over $1 billion in fraudulent refunds claimed by identity thieves on more than 170,000 tax returns. During the same period last year, we had stopped about $754 million in fraudulent refunds claimed on 141,000 returns. So you can see we’re making progress – stopping tens of thousands more returns worth a quarter billion dollars. We’ve also enlisted the public’s help. In November, we launched the “Taxes. Security. Together” campaign to raise awareness about the steps people can take to protect themselves and avoid becoming victims of identity theft. We strongly believe that having the taxpaying public as a partner in this effort will greatly strengthen and amplify the new tools we have to stop the crime of identity theft. But as I’ve said many times, there can’t be any let-up in this fight. Refund fraud caused by identity theft is a serious and complicated threat that continues to grow. Criminals – many of them sophisticated, organized syndicates – are redoubling their efforts to gather personal data to file fraudulent federal and state income tax returns, hoping to find new ways to slip through our fraud filters and steal refunds. So while I’m encouraged that we’ve made significant progress against this threat, we have a lot more work to do. That’s why we’re announcing a new phase of the Security Summit effort, to make even more improvements in our ability to protect taxpayers and their data – while at the same time preventing harm to the tax system at the federal and state level. First, I want everyone to know that the Security Summit Group itself will continue. The partnership has been so successful that, with the enthusiastic support of everyone involved, we made the group permanent. It will continue under the auspices of the Electronic Tax Administration Advisory Council, or ETAAC. The Summit Group is already hard at work on new steps we will be taking to improve protections for taxpayers heading into next year’s filing season. We’re analyzing the results of the 2016 filing season, so we can decide how to improve our fraud filters even more for 2017 and stop still more fraudulent refunds before they can be processed. We will be working on ways to improve our authentication of taxpayer identities when they file their returns. We will expand efforts to collaborate with financial institutions. And we will continue to increase public awareness about the need to guard against identity theft. We are also expanding our efforts to collaborate with a group that’s absolutely critical to the tax system – the tax return preparer community. We’re very concerned that identity thieves, in their never-ending hunt for taxpayer data, are turning their attention more and more to focus on tax return preparers. We already saw some evidence of this during the last filing season. So our subgroup devoted to tax professionals is already hard at work identifying steps that we can take to help return preparers safeguard their own information and their clients’ data. This will include getting the word out to return preparers to help them understand what safeguards they can put in place themselves. We will be launching a new campaign in this area. We’ll have more details on that available soon, and we will be reaching out directly to return preparers on this issue at this summer’s IRS Nationwide Tax Forums to be held in cities around the country. The first Tax Forum will be in Chicago in two weeks. Another important effort going into next year involves the ISAC, the joint information sharing center I mentioned a moment ago. As we saw this past filing season, sharing information and doing it in real time has been critical to our ability to respond rapidly to evolving threats, so the ISAC will be an important tool going forward. We will use the ISAC to centralize, standardize and enhance the way data from Security Summit Group partners is collected and analyzed. This will allow us and our partners to make the best possible use of the data being shared – to analyze and spot trends as they emerge. I’m confident we’ll have key components of the ISAC working by the next filing season. With the ISAC in place, the ability of all partners in the Security Summit Group to safely share and access information will be greatly improved, to the benefit of all. We’re also going to be expanding our W-2 Verification Code pilot for the 2017 filing season. This involves a special code included on W-2s, which is entered on the tax return to confirm the accuracy and integrity of electronically filed returns. We ran a pilot this past filing season with several payroll service providers involving 2 million W-2’s that helped verify information and protect the taxpayer. For 2017, we’re expanding the pilot to add this special protective code on up to 50 million W-2s. We appreciate the support we’ve had from the payroll service community and the software industry on this project. This will be an extra layer of protection that will help taxpayers and the tax system. Obviously there’s still a long road ahead of all of us, but I’m greatly encouraged by the progress we have made so far. I again want to thank everyone involved with the Security Summit Group for all their hard work and dedication. I’m confident that we will continue to build on the accomplishments of this past year, and continue providing stronger and better safeguards for taxpayers, to protect them and the tax system against the crime of identity theft. The future of our tax system is better because of this ground-breaking effort.
