A surge in tax refund fraud and identity theft has prompted the Internal Revenue Service to consider sharing more tax return information with police, a senior official told a congressional hearing on Tuesday.
In a move that could spark concerns over personal privacy, the IRS said it is considering a pilot program in Tampa, Fla., where identity theft and refund fraud are rife.
"We are limited in what we can supply to local law enforcement," said Steven Miller, deputy IRS commissioner for services and enforcement.
Tax return information is normally kept tightly secret by the IRS. Under the program, exceptions could be made, with the permission of victims of identity theft and tax refund fraud, so that bogus tax return documents could be shared with police.
Tampa has seen a rash of identity theft and tax refund fraud cases since last year, totaling $130 million in stolen funds. Suspected wrongdoers steal Social Security numbers and file returns seeking tax refunds, using an abandoned home or another phony address as a delivery point.
Democratic Senator Bill Nelson of Florida held the hearing to tout his legislation to allow more taxpayer information sharing between the IRS and local law enforcement.
No date has been set for the Tampa program to begin, according to IRS.
In 1976, Congress made it a crime for IRS workers to share taxpayer information.
"There was a reason why we are limited in providing to local law enforcement, in an unfettered matter, tax returns," Miller said. "Congress has treated tax return information as sacrosanct."
Nina Olson, the national taxpayer advocate at the IRS, supported some information sharing, but cautioned that once local law enforcement has access to taxpayers' returns, they could be shared with other people.
Congress should modify the IRS information-sharing prohibition but limit the disclosure of the information for any purpose other than law enforcement, she said.
(Reporting by Patrick Temple-West; editing by Kevin Drawbaugh; desking by Lisa Shumaker)
3 Comments
Big brother is here. If I as a preparer am not allowed to use my clients information without their permission - I guess the IRS will hold themselves to the same. I doubt it.
Posted by: debbiebearden | March 23, 2012 10:18 AM
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Same thing when I asked questions for a client. Client was victim of identity theft on his 2010 return, during the process of discussion with the IRS and the submission of all documents to prove my clients were victims of fraud, I was told they would be issued the new pin number which was designed to prevent this. Well, calling the other day to see whether pin was sent or not, because client never received one, the agent told me that his wife had already filed this year. Meaning the same person and same address was used to file a second fraudulent return.
Seriously. RAL loans and prepaid debit cards are the serious issue. Eliminate those, require brick and mortar banks to receive deposits and require the banks to properly match names on refunds to names on the account and the problem is solved.
If clients can have or don't want a bank account, the paper check to them. Simple and efficient and no billions need be wasted.
Posted by: fsteincpa | March 23, 2012 10:07 AM
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The IRS does not share anything with itself, never mind and outside agency. Down here in the Tampa area the IRS will not cooperate with the local police, the FBI or tax professionals who offer to help.They don't even return phone calls. I recently tried, with a Power of Attorney, to get information in a client's account (transcript) but was told I could not have it because since I thought Identity Theft was an issue the information in the file was not my client's therefore I could not have access to it theoritically to protect the identity of the "person" whose information it was. They need to start protecting and assisting the victims as much as they are the "suspected" criminals.
Posted by: equigs | March 23, 2012 9:53 AM
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