IRS Isn’t Doing Enough to Help Identity Theft Victims

5 Comments

It seems that one very easy step would be to cross check the W-2's prior to issuing refunds. Most are filed electronically.

Posted by: Bookie71 | January 13, 2013 12:35 PM

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Americans living abroad are exposed to identity theft and related risks due to the FBAR filing requirement and FATCA:

1) FBAR: Annually Americans abroad file on paper a list of their bank account details including highest balance and TIN. If this letter were to be intercepted on its way to Detroit, an identity thief would have much of the information s/he needs to assume the overseas taxpayer's identity and possibly steal his/ her assets held in bank accounts.

2) FATCA: A very serious concern for Americans living in "less than stable" countries is that FATCA will require that they be identified by foreign banks as an American. Michael Young, an opinion editor for the Lebanon Daily Star describes this concern in a December 2012 editorial called "FATCA's Security Problem"(excerpt):

"However, there is one aspect of FATCA that has not been sufficiently examined, but that remains potentially hazardous. The American government is effectively asking foreign institutions to prepare detailed data bases of American citizens, with no guidelines explaining how this information must be protected. For a country obsessed with the security of its citizens in the aftermath of the 9/11 attacks, such behavior is paradoxical, indeed astonishing.

Foreign financial institutions will effectively become vast repositories of information on Americans--including what they earn, the sources of their income, what they spend, where they live, who their family members are, and so on. In their zeal to implicitly label Americans living abroad as tax cheats requiring monitoring, the sponsors of FATCA have shown utter indifference to the safety of their citizens.

In some countries, the American authorities are well aware that their enemies have ready access to financial institutions. The Lebanese Canadian Bank scandal, in which bank managers were accused of helping Hezbollah launder money, showed that this was true in Lebanon. What is to prevent anti-American groups elsewhere from gaining access to data on American citizens, and possibly using this to their advantage? FATCA helps make it eminently possible.

Strangely, we have heard nothing about FATCA from the State Department, which is responsible for Americans overseas. At a time when American embassies regularly issue advisories to citizens to guarantee their safety, we are seeing the IRS asking institutions abroad to gather the most sensitive facts on Americans, with no oversight. The irresponsibility is breathtaking. Worse, because FATCA imposes pariah status on Americans abroad, whatever rightful protest they have against the legislation will sound suspicious."

FATCA's outing of the 6.3 million Americans living abroad to terrorist groups may indeed be the next identity theft battlefield.

Posted by: thurbo | January 11, 2013 4:58 AM

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So Identity theft increased during the period that all of the IRS attention was focused offshore. Misplaced priorities...

Thanks for pointing out the one item that I have not seen any other report on the NTA report note:

MSP 8 The IRS's Offshore Voluntary Disclosure programs and their failure to distinguish adequately between "bad actors" and "benign actors."

I would add to this

MSP 15..Challenges Persist for International Taxpayers as the IRS Moves Slowly to Address Their Needs

Note these Conclusions.

5. Develop a method of simplified tax and information reporting online, modeled after the new online FBAR form for taxpayers incurring foreign taxes higher than the U.S. effective tax rate -- resulting in no tax liability.

6. Establish a voluntary compliance program for international individuals, including a combination of simplified filing and relief from all penalties for taxpayers who have no liability.

7. Increase the threshold for the Streamlined Nonresident Filing Initiative from $1,500 of tax due to $10,000

Posted by: Just Me | January 11, 2013 3:27 AM

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It is very complicated problem. IRS alone cannot handle. Set of measures is needed here because the data can steal everywhere-all service, merchandise businesses are asking too much. Consulting companies simply sell this information. Always the first question in the questionnaire is the CC number, even Doctor Hospital. The private medical offices are not controlled: they also can sell information.

Posted by: nadezdamindyuk | January 10, 2013 12:51 PM

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I have found a way the IRS can stop as much as 75 million dollars of identity theft for IRS refunds,but I am unable to reach the commissioner to provide him this info Can you help?

Lloyd M Abrahams CPA 631-842-4735

Posted by: MRCANDU10 | January 10, 2013 11:10 AM

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