Identity Theft, Your Taxes, and what the IRS isn’t doing

The April 15th tax deadline has come and gone, so we can all sit back and relax now right? Not so fast, turns out you have may have a whole new set of problems even after you’ve mailed in your taxes. The IRS has recently come under fire for some of its privacy practices, or lack thereof, and its lethargic approach to identity theft. In a recent report by the Treasury Department’s Inspector General (TIGTA), it was noted that the IRS has failed to place significant emphasis on tax fraud and identity theft strategies. Here’s a breakdown of what the TIGTA had to say about the IRS.

TIGTA Findings

One of the main criticisms the Treasure Department’s Inspector General about the IRS involved its lack of effort in stopping fraud and identity theft. It was found that the IRS does not pursue individuals using another person’s identity unless the case involves a major tax or conspiracy violation. That means criminals are getting away with identity theft if the case doesn’t have a large tax effect.
Despite receiving close to 100,000 complaints of identity theft in 2005 and 2006, there were only a 100 criminal investigation cases recommended for prosecution that involved identity theft.
The IRS has begun outsourcing tax collections operations to outside agencies and is letting tax preparers sell consumer data to affiliates, all without the consumer’s consent. While these other agencies and affiliates are often professional organizations, it’s still another opportunity for someone to get access to your personal information.
Many of the IRS’s procedures have been deemed questionable at best and reckless at worst as multiple Congressional reports have documented its lack of agency-wide privacy practices. There have even been reports of lost computers and data storage devices, some of which contained sensitive information.
In a prime example of lack of communication, consumers are receiving multiple notices of underreporting their taxes even after their cases had specifically been marked as closed for identity theft.

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