IRS closes in on industry-based fraud squad

The Internal Revenue Service is inching closer to operationalizing a public-private information sharing center to help prevent tax fraud.

The move comes as the IRS fights a multi-front battle to tamp down on identity theft in the wake of a 2015 data breach of the agency's "Get Transcript" application, which resulted in the unauthorized access of hundreds of thousands of taxpayer accounts.

The agency put out an Request for Information May 3 seeking to gather market research about how best to manage its Identity Theft Tax Refund Fraud Information Sharing and Analysis Center. Among other requirements, officials are looking for an organization to conduct data analysis and incorporate best industry practices for the center's secure operational platform, which facilitates information sharing between government and industry about identity theft-related refund fraud. According to the RFI, the center currently counts 45 states and 17 industry groups as members.

The Identity Theft Tax Refund Fraud Information Sharing and Analysis Center was originally created in 2016 through the IRS "Security Summit," a now-annual meeting of government and industry tax administrators to collaborate on emerging threats that was started under former commissioner John Koskinen in 2015.

Information sharing groups known as ISACs currently exist in many critical infrastructure fields, including energy, IT, transportation, shipping, emergency management, aviation and the automotive and defense industries.

The RFI notes that hundreds of millions of taxpayers have had their sensitive data exposed in public and private sector data breaches over the past few years.

Last month, the agency stood up IdentityTheft.gov, a website to help taxpayers notify the government when their identity have been stolen and develop recovery plans. Tax officials believe small businesses are particularly vulnerable and a separate notice sent out by the IRS May 3 warning that "in the past two years, the Internal Revenue Service has noted a sharp increase in the number of fraudulent filings" of partnership, estate and trust tax forms that are heavily used by small businesses, as well as a boost in the use of company names and Employer Identification Numbers by identity thieves.

Responses to the RFI are due May 14.