A new study has found that the Form 990 tax returns filed by tax-exempt organizations frequently expose the Social Security numbers of tax preparers, donors, employees, scholarship recipients and others to the public.
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The study, released Monday by Identity Finder LLC, used its Identity Finder DLP 6.0 software to search through 2,892,475 Form 990s from tax years 2001 through 2006 for personally identifiable information such as Social Security numbers.
Even though SSNs are not generally required on a Form 990, Identity Finder found that 132,362 organizations published 472,866 SSNs, of which 171,005 were unique.
Between 2001 and 2006, more than 18 percent of all nonprofit organizations or their tax preparers published at least one SSN on their public tax return, the study found. In all, 287,238 Form 990 returns contained at least one SSN.
All Form 990s are “open to public inspection,” and are regularly published by the Internal Revenue Service and multiple third parties, the company noted. High school and college scholarship recipients, tax preparers, directors, employees, trustees, and donors were the primary groups whose SSNs were exposed. At least 35 percent of the SSNs belonged to tax preparers who identified themselves by their SSN instead of a Preparer Tax Identification Number, or PTIN.
“Organizations and tax preparers must understand the risks of including Social Security numbers on public documents, such as the IRS 990 form,” said Identity Finder CEO Todd Feinman in a statement. “Unlike a credit card number, Social Security numbers cannot easily be revoked. Given the seriousness and ubiquity of identity fraud, tax preparers should avoid including SSNs on Form 990s.”
His company is advising nonprofit organizations that have published SSNs to warn those affected that they may be at increased risk of identity fraud. Organizations should avoid placing personal information, especially SSNs, on public documents such as Form 990s and court documents. College foundations should determine whether exposure of their students’ personally identifiable information on tax returns violates provisions of the Family Educational Rights and Privacy Act of 1974. Donors should not share their SSN with charities, the company warned.
Scholarship applicants should review the most recent Form 990 of any foundation prior to applying to verify that they do not publish SSNs, the report recommended. In addition, individuals should always require any organization to justify a request for his or her SSN.
Tax preparers should provide their PTIN rather than their SSN on tax documents, the report advised. They also should ensure that no personally identifiable information is unnecessarily disclosed on IRS forms they approve.
The report recommended that the IRS should publish explicit guidance explaining that SSNs are not to be published on Form 990s. The IRS and other stewards of past 990 filings should only provide redacted copies of the forms, according to the study.
For a copy of the report, visit http://www.identityfinder.com/990report.