Identity theft protection at the Internal Revenue Service (IRS) should be improved, according to a report from the Office of the National Taxpayer Advocate.
The Office was created 10 years ago through the IRS Restructuring and Reform Act of 1998 and is designed to protect the rights of taxpayers.
The report said tax-related identity theft is one of the most serious problems facing taxpayers. It noted that the IRS does not have adequate procedures in place to assist victims of identity theft and does not have adequate systems in place to quantify the number of tax-related incidents of identity theft that occur.
The National Society of Accountants (NSA), which represents many of the nation’s professional tax preparers, agreed that the risk of identify theft is a critical area of concern.
“When someone’s identity is stolen, it literally turns their world upside-down,” said NSA President Andrew T. Morehead CFP, ATP, ECS. “We see these situations firsthand with some of our clients. The last thing people need to worry about is having their identity stolen from a government agency where they are required by law to provide sensitive personal information. We strongly support the recommendations to improve taxpayer protection in this area.”
The report made eight recommendations, including the creation of a centralized unit to handle identity theft cases and the development of a centralized set of procedures that cuts across IRS functions.
The IRS has already taken a number of steps to improve its procedures, including developing an IRS-wide identity theft indicator, and is studying the creation of a centralized unit to assist identity theft victims. During FY 2009, the Office of the Taxpayer Advocate will work with the IRS to improve its procedures in this area.
NSA offers these tips for consumers on avoiding identity theft:
•Don’t carry your Social Security Number (SSN); leave it in a secure place.
•Only give your SSN when absolutely necessary.
•Your employer and financial institution may need your SSN for wage and tax reporting purposes. Don’t give a business your SSN just because they ask for it. Find out why before giving it out.
•Ask why your SSN is needed and if other types of identifiers can be used. For example, if your state uses your SSN as your driver’s license number, ask to substitute another number.
•Ask your employer what steps they are taking to protect your SSN at work from theft by someone who might be planning a tax refund crime.
•Choose your tax practitioner wisely.
“If your identity is stolen, NSA member accountants have the skills and resources to help fix the situation,” Morehead added. “It’s important to act quickly if you suspect there might be a problem.”
NSA and its affiliates represent 30,000 members who provide accounting, auditing, tax preparation, financial and estate planning, and management services to approximately 19 million individuals and business clients.
For more information and to use an online search directory to identify a qualified tax preparer in your area, visit www.nsacct.org and click on “Find a Professional” or call 800-966-6679.