To say the IRS is in the “hot” seat is an understatement especially when it comes to government oversight committees. According to an AccountingWEB article titled: “IRS Told More Needs to Be Done to Fight Identity Theft “Epidemic“ a subcommittee of the House Oversight and Government Reform warned the IRS to improve its efforts to get a handle on and stop identity theft; an increasing tax problem now being termed an “epidemic.”
The article states that on August 2nd, the panel, headed by Chairman John Mica (R-FL), “grilled” IRS Principal Deputy Commissioner and Deputy Commissioner for Services and Enforcement Daniel Werfel, and was not overly sympathetic to the IRS’ plight. Using data from the Treasury Inspector General for Tax Administration (TIGTA), the panel mentioned that taxpayer ID theft jumped to 1.9 million as of June 29, 2013, up from 1 million in fiscal year 2011.
The tax issue of identity theft appears to have bi-partisan agreement as both Republicans and Democrats have condemned the situation as “getting worse, not better” and calling identity theft “an epidemic that is profoundly unacceptable.
The article points out that despite the criticism Werfel went on the defensive and cited the following strides the IRS has made:
- Implemented steps to deter ID theft since he assumed leadership less than three months ago
- Conducted 1,100 investigations, producing 785 indictments all mid-year
- Suspended or rejected more than 4.6 million suspicious tax returns and closed 565,000 cases.
- Created new procedures and programs for faster recovery time for victims based on a centralized effort and cooperation with banks and third-party vendors.
- The agency has more than doubled the number of employees (3000) over last year’s filing season.
Werfel’s message to the panel was to explain that in spite of the identity theft challenge, the current data show it trending in the IRS’ favor. He also listed the following as major obstacles in the agency’s path:
- The overwhelming volume and complexity of the problem
- The need for upgraded technology filters and authentication procedures
- The lack of available funds due to budget cuts. According to Werfel, these restraints have cost the IRS 8,000 jobs and that more cuts would weaken all IRS programs including identity theft curbing measures.
The National Taxpayer Advocate, Nina Olson acknowledged the IRS’ increased efforts since she began keeping track in 2004. Nevertheless, Olson admitted the agency needs to do more for victim assistance.
Increasingly complex cyber-crimes and schemes have made prevention and enforcement the toughest challenge for the IRS to date. This previous Tax Resolution University post highlights the tax identity fraud case of friend, Robert Sullivan so you know it can happen to anyone. Still, taxpayers need to stay alert. Remember: if it seems too good to be true, it usually is. Falling for a tax scam or scheme today will most certainly become an IRS tax problem tomorrow.
Taxpayers with lost or stolen personal information who believe they may be at risk of identity theft due to should contact the IRS immediately to make sure their tax account is clear.