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I-Team: IRS Unveils Plan To Protect Tax Refunds

BOSTON (CBS) - It's been a billion dollar problem for the Internal Revenue System: identity thieves stealing the tax refund checks of honest taxpayers.

The I-Team first exposed this problem several years ago when we introduced you to Kevin Johns. His refund wasn't stolen just one time. It was swiped twice.

"I needed that money, and I actually had to take a loan from a family member," said Johns.

The IRS has now unveiled a plan to crack down on a problem which resulted in the loss of about $5.8 billion in 2013.

Simply put, a crook steals the personal identity information of an honest taxpayer and files the return first.

The IRS then unknowingly sends the refund to the wrong person.

Chris Howard was a victim like Johns. He said the IRS told him his return had been filed and the check already sent by the time he realized there was a problem.

Professor Steven Weisman of Bentley University believes this is a big problem for the federal agency. He has authored a number of books on identity theft.

About the new plan, Weisman explained, "One of the things the that the IRS said they are going to do is finally start looking at the Internet address from which the income tax returns are sent, because before, they would come from the same address multiple times."

Likewise, updated software will track where the checks are sent, to make sure one address isn't receiving a large number of refunds.

Weisman said the plan shows a new willingness to collaborate on this growing problem. "One of the big things is cooperation with individual tax preparers, tax preparing companies, and corporate America. This is very significant because one of the things that we have not had with all of the issues with data breaches, and identity theft, is cooperation."

Weisman remains concerned about the way W-2 forms are distributed. "Employers send the W-2's to the Social Security Administration, not to the IRS."

By the time the IRS gets to cross referencing information, it could be too late and one of those bogus checks could already have been cashed.

The IRS expects to have these safety measures in place by early next year, before the April 15th tax deadline. If all goes well, honest taxpayers shouldn't notice a difference.

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