Americans face changes for 2016 tax season

Americans might want to budget a little more time for taxes next year.

Attempting to stem a spike in tax-refund fraud, the Internal Revenue Service, partnering with public and private tax administrators, said 20 new pieces of data will be used in tax returns in 2016. Tax preparation companies will share the information with the IRS and state agencies in an effort to combat an escalating problem that has already had returns falsely filed in the names of several million Americans.

The added security measures should not involve a "sea change" for taxpaying in filing returns electronically, Koskinen said in a news conference on Tuesday. Among the changes for taxpayers are likely to be more stringent passwords to access tax software, a new feature that will lock users out after a certain period of time and unsuccessful log-in attempts, and additional security questions.

"This is not a battle the IRS can fight alone," IRS Commissioner John Koskinen said of the security summit convened seven months ago with industry leaders, with 34 states and 20 players in the financial and tax industry signing on to the effort.

The "20 data components will be largely invisible to taxpayers -- we're not interested in giving criminals a road map," he said. "We'll do a better job of stopping a refund before it goes out the door."

The IRS said in May that criminals swiped information on 104,000 U.S. taxpayers from the agency's website and used the data to file some 13,000 fake tax returns that cost about $39 million in refunds.

For the coming tax-filing season, the agency will for the first time monitor whether multiple returns are filed from the same device, how long it takes for the forms to be filled out and whether they appear to be automatically generated by a machine.

"All of these give us a better defense against criminals trying to use stolen taxpayer information to file false returns and claim a fraudulent refund," Koskinen said. "And we can do a better job of stopping the refund before it goes out the door."

About 2.4 million taxpayers' names or Social Security numbers were used in falsified returns in 2013, an almost tenfold spike from 2010, according to the Treasury Inspector General for Tax Administration.

The IRS estimates it paid $5.8 billion in refunds on returns in 2013 that it later found to be fraudulent, while it stopped attempted fraud involving more than four times that amount.