As tax season winds down in the US, many citizens may be dealing with the harsh reality of identity fraud. Filing taxes every year is the U.S. government’s way of ensuring people paid the correct amount of taxes in the prior year. Depending on the calculations at tax time, the Internal Revenue Service (IRS) will issue a bill (for underpayment) or a refund (for overpayment). To file taxes, an individual must include sufficient personal information to confirm their identity. This includes name, address, date of birth and social security number. This 9-digit identification number for U.S. citizens is the core identifier to access governments programs and services—not to mention other services, like opening a bank account, applying for a job, getting a new credit card, etc. If a social security number gets into the wrong hands, it can contribute to increased fraud and be disastrous for the identity it belongs to. The simple act of filing taxes alone consolidates all the information a bad actor may need to steal an identity. As such, security when filing is of upmost importance.
Biometrics can help.
Security risks during tax season
Since personal information is at the forefront of filing taxes electronically, there are ways that scammers will try to infiltrate and exploit the information for personal gain. For example, a computer hacker could get personal information of a person filing their taxes electronically through computer data theft—like phishing, viruses and data breaches. If the person’s social security number is obtained, the criminal can then apply for a credit card in the person’s name, take out loans, get a job and completely steal the person’s identity.
In the wake of the on-going pandemic, the need for security around personal information has risen due to more people choosing to file electronically. Most commonly-used electronic filing services require passwords, which can be unreliable as an authentication method. Passwords can be stolen or guessed by others and can result in information being compromised. Biometrics are able to address the problems with passwords because they use something scammers cannot steal or guess: a person’s face, iris, voice or fingerprint. Implementing biometrics can easily add a higher degree of security and peace of mind. And it can be done with hardware already in possession; modern devices like smartphones and laptop cameras can be used for capturing biometrics.
Businesses can leverage biometrics for security and convenience. After all, people want to get their tax filings done quick, with high security and privacy, and without adding complexity or friction. Once a person’s biometrics are enrolled into the filing system, they can be used by electronic filing software to authenticate the user in order to access the tax platform. This validates that they are who they say they are. And, if using face as the biometric modality, enrollment and authentication is easy—like taking a selfie.
Adoption of biometrics in tax filing
Currently, the use of biometrics in the tax filing process is limited but growing in adoption. In the United States, some states such as Alabama, have been incorporating biometrics into their tax filing process. Additionally, the country of India has mandated biometrics to be part of the tax filing process for a number of years. Also, the Republic of Congo recently launched a biometric tax identification system under the patronage of the Minister of Finance and Budget.
As mentioned above, the ongoing global pandemic has resulted in an increased number of tax e-filings which created additional opportunities for scammers. They thrive on confusing and complicated situations and climates; and COVID-19 provided both.
Scamming in the U.S. has been such a problem that the U.S. Department of Treasury updated its site with public announcements to protect people against scams:
“If you receive calls, emails, or other communications claiming to be from the Treasury Department and offering COVID-19 related grants or stimulus payments in exchange for personal financial information, or an advance fee, or charge of any kind, including the purchase of gift cards, please do not respond. These are scams. Please contact the FBI (Federal Bureau of Investigation) at www.ic3.gov so that the scammers can be tracked and stopped. Fraud involving payment of Federal taxes should be reported to the Treasury Inspector General for Tax Administration.”
Biometrics balance security, privacy and convenience
Biometrics can play a pivotal role in the balancing act of security, privacy and convenience. Over time these tools will continue to improve in efficiency and convenience. The industry is taking great care and steps to make sure the biometric solutions they use do not store any images of the users biometric. This is critical to continue to adhere to the highest standards of privacy. Biometrics is another important piece of the arsenal we need to use to stay ahead of criminals who continue to learn, adapt, and create new ways to break into systems and victimize people.
Our vision is that electronic tax filings could evolve to incorporate biometrics directly into every step of the identification and verification process. When a person enrolls in the system to file their taxes, instead of setting up a password and a series of personal questions, they simply provide their face, voice, iris, or fingerprint to identify themselves. Subsequent access for tax payment, refund or other purposes would then require these biometrics and be done conveniently via a mobile phone or browser.