The Electronic Tax Administration Advisory Committee released its annual report to Congress on Wednesday, featuring recommendations that focus on the prevention of identity theft and refund fraud.

ETAAC’s primary focus continues to be on the fight against ID theft-related tax refund fraud, improving cybersecurity and enabling electronic tax administration while protecting taxpayer information, the 2020 report explains.

“The wholesale theft of huge volumes of personal information has provided criminals and other bad actors with detailed and accurate taxpayer information … It would be great if there were a silver bullet to make it easy for the IRS to spot these fraudulent returns,” the report added.

The IRS should continue to develop and implement a system to enable real-time electronic EFIN validation by authorized third parties and evaluate options to extend this to real-time electronic PTIN validation, the ETAAC included among its security recommendations.

Among other recommendations:

• Collaborate on the identification and mitigation of disruption threats to our tax system;
• Engage with the Federal Trade Commission to assess impact and implementation of proposed changes to FTC Safeguards Rule; and,
• Study information security practices and identify vulnerabilities in the tax preparer community.

“The impact of and [tax community] response to the pandemic provides a time to capture some critical lessons learned … What worked well and what can be done better?” the report added. “Does the IRS need more established incident response teams and procedures to facilitate discussions, feedback and communications with state, industry and taxpayer stakeholders?”

The ETAAC is a public forum whose members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and the nation’s tax industry to fight ID theft-related refund fraud and cybercrime. ETAAC members represent various segments of the tax community, including individual and business taxpayers, tax professionals and preparers, state and local governments, consumer advocates, tax software developers, payroll service providers and the financial industry.

Eight committee members’ terms are ending, including Mark Steber, chief tax officer with Jackson Hewitt Tax Service; Kathy Pickering, chief tax officer at HR Block; Phil Poirier, volunteer preparer in the IRS VITA program; and John Sapp, vice president of strategic development at Drake Software.