The Connection, Inc Blog

One of the most high-profile hacking attacks in the United States struck last year when the Internal Revenue Service (IRS) was breached. 464,000 Social Security numbers were swiped; enough to file 101,000 tax returns using false personal identification numbers. Every organization can learn how to better protect themselves during tax return season, especially since you have so much on the line every year.

In response to the aforementioned threat, the IRS has made several improvements that allow the organization to (hopefully) better protect taxpayers as they perform their financial obligations. Specifically, these improvements are effective “before, during, and after a tax return is filed.” On the IRS’s official website, “This is highlighted by the number of new people reporting stolen identities on federal tax returns falling by more than 50 percent, with nearly 275,000 fewer victims compared to a year ago.”

One of the best tools that the IRS has used to cut down on these concerning identity theft numbers is an annual security summit. In part, the following results have been attributed to the summit:

• Fraudulent returns are being stopped more frequently before processing: The IRS accounted for almost 50 percent fewer fraudulent returns, which amounts to about 787,000 identity theft returns from January 2016 to September 2016. These returns would have totaled well over $4 billion.
• A significant decrease in fraudulent refunds: 106 new institutions became bank partners since 2015, and this played a role in cutting fraudulent refunds. The number of refunds that seemed questionable and were stopped by banks increased by more than 50 percent, and these suspect refunds were brought back to the IRS for further examination.
• A sharp decrease in identity theft affidavits: Throughout the first nine months of 2016, the number of identity theft affidavits was cut in half.
• New data on tax returns: With more data required to properly fill out a tax return, the IRS has managed to keep over 74,000 suspicious returns from processing, which in turn kept $372 million out of the pockets of identity thieves.
• Shared information stopped false returns: The sharing of data was instrumental in preventing 57,000 fraudulent tax returns, and it wouldn’t have been possible without the cooperation of various industry and state partners.

While these improvements are quite a start, any business owner who is also a taxpayer will want to know that the IRS still needs to improve the way that they handle sensitive data. This is only one reason why you need to take the matters of your own identity security into your own hands. For your review, the IRS has created a list of steps that should be taken in order to protect your organization and all of those that your business engages with from identity theft. You can find a list of these steps on the IRS’s website.

To learn more about how you can keep better track of sensitive information, reach out to The Connection at (732) 291-5938.

In 2011, the world was introduced to IBM’s supercomputer Watson after it handily won the television quiz show Jeopardy!. Since then, Watson has been utilized in a variety of helpful ways, including customer service for Macy’s and Geico, as well as medical research. Today, Watson is being tapped by H&R Block to assist the public with an issue that affects every American, their taxes.

To be clear, H&R Block isn’t replacing its 70,000 tax professionals with Watson, but rather, Watson is being utilized to assist H&R Block’s staff best serve its 11 million customers.

In a statement, Bill Cobb, a chief executive of H&R Block, says that he hopes the partnership with IBM will “reinvent the retail experience for taxpayers.” For IBM’s part, they’re looking to showcase how AI technology can benefit corporations--a profitable market that has yet to be fully realized.

Learning Tax Codes is Elementary, My Dear Watson
As you can imagine, turning Watson into a tax expert took some teaching on H&R Block’s part. In order to prepare Watson for the tax season, the supercomputer first needed to process and learn 74,000 pages of the federal tax code, as well as the thousands of tax-related questions accumulated by H&R Block over six decades of tax preparation. As is the nature of AI, every question and interaction processed by Watson makes it more knowledgeable of the given subject, so it will be interesting to see how valuable Watson proves to be in a real-world tax scenarios (which tend to be rather unpredictable).

In Watson’s case, the supercomputer is specifically designed to handle such a task, seeing as its primary function is to process and classify vast amounts of data using natural language. During the training period, H&R Block’s tax professionals from nearly 100 locations worked with Watson by correcting the supercomputer when it provided irrelevant information to tax questions, and responded positively when it gave an appropriate response. This is a process known as machine learning, and it’s sure to be a topic you’ll hear more about in the near future.

Here’s Your Chance to Talk to Watson!
With Watson now online and accessible to H&R Block’s clientele, you can access the supercomputer/celebrity yourself by creating a user account with the tax service. You’ll then be able to ask both Watson (as well as a boring old human tax professional) questions about your tax forms. To assist with your progress, your tax credits and deductions will be available for you to see, as well as suggestions to help you best navigate your tax return.

It’s the goal of H&R Block to utilize Watson in such a way as to make the tax process interactive and engaging, and of course, to increase the chances of a favorable tax refund and a reduction in tax liabilities. Although, Cobb is quick to point out that Watson won’t achieve this with computer processing alone. Why, at the end of the day, “the tax pro is only as good as the input they get from the taxpayer.”

Will Watson help H&R Block achieve its business goals? Only time will tell, seeing as success for a tax company comes in the form of retaining its customers for the following tax season. Would you feel comfortable having a Watson file your taxes? Can you think of ways that AI can enhance the operations of your company? Share with us your thoughts in the comments below.