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IRS Identity Theft Safeguards Necessary, But Challenges Remain

The dangers of identity theft related to tax filing are very real and the Internal Revenue takes seriously its duty to help stem the tide on behalf of Americans attempting to meet their tax obligations each year. However, initiatives taken by the agency to halt this type of criminal activity have in some cases placed additional hurdles in front of conscientious citizens.

Mid-year status report raises concerns

National Taxpayer Advocate Nina E. Olson recently issued her office’s twice-yearly report to Congress in which she lauded the IRS for its Taxpayer Protection Program (TPP). This is a plan designed to screen tax returns for which a refund would be due so that those with suspicious characteristics are targeted for more detailed scrutiny. When the program mechanisms spot a questionable return, the agency customarily contacts the filer by mail, seeking additional verification of their identity. While this often does work to thwart the efforts of identity thieves, it can also cause unnecessary delays and difficulties for taxpayers filing legitimate returns in good faith.

Refund delays troublesome for many

According to Olson’s report, the rate of false positives gleaned from the TPP’s processes in 2015 came in at 36.6%. Thus, out of the almost 2.1 million tax returns flagged by the IRS as being in need of additional identity verification before refunds could be sent, 760,000 of them were ultimately deemed legitimate and proper. While this tally may seem insignificant in the vast landscape of filings, Olson suggested that delays in the receipt of refunds, especially by those in lower income brackets, can create real hardships.

Prior recommendations that the agency fine-tune the TPP filtering criteria to lower incidents of this type appear to have gone unheeded, according to Olson.

Taxpayer Advocate highlights other agency concerns

Olson’s report included other areas in which the IRS has failed to facilitate smooth filing and resolution of identity theft screening alerts. Perhaps most significantly was her contention that the agency needs to do more to help taxpayers attempting to prove their true identity by contacting the IRS by telephone. Olson’s information revealed that the TPP phone line received over 4.4 million calls in the 2016 tax season, but only 22.7% of them were actually answered. The unfortunate result for many has been substantial, burdensome delays in receiving the refunds to which they are rightfully entitled.

The dangers of identity fraud are very real, and it is vital that agencies receiving personal data take their roles seriously and work hard to prevent theft. However, as Olson emphasizes, the IRS needs to be responsive to taxpayer complaints and endeavor to ease the burden on law-abiding filers. To that end, she recommends that the IRS adjust its tax identity theft filters during the months of heaviest filing and set a maximum acceptable rate for false-positives.

Experienced guidance for Maryland taxpayers

When it comes to keeping identity thieves at bay, taxpayers can often be their own best ally. By safeguarding personal data, steering clear of suspicious email attachments and periodically reviewing credit reports, it is possible to substantially reduce the likelihood of becoming a victim. Should thorny compliance problems or other tax questions arise, the Maryland tax attorneys at Rosenberg Martin Greenberg stand ready to assist individual and business clients throughout Maryland in meeting their state and federal tax obligations.

To schedule a confidential consultation to discuss your IRS identity theft, compliance, audit or tax planning concerns, contact Brian Crepeau at bcrepeau@rosenbergmartin.com or 410.649.1991.

Rosenberg Martin Greenberg

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Phone: 410-727-6600
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Rosenberg Martin Greenberg

705 Melvin Avenue Annapolis, MD 21401
Phone: 410-727-6600
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