IRS Criticized for Bad Job on Identity Theft

On Wednesday, a federal report was published that revealed the ineffectiveness of IRS in catching criminals of identity theft crimes and providing timely assistance to the victims of the crimes. This criticism comes especially when the number of identity theft crimes continue to increase.

National Taxpayer Advocate presented their annual report to the Congress which revealed that the response of the agency fell short of the claims made by former IRS commissioner Douglas Shulman. In 2008, he promised that all victims of identity theft crimes would be aided without any problems.

The main problem revealed against the IRS revolved around perpetrators that found their way into people’s identification information including their Social Security numbers. IRS, it seems, was unable to respond effectively to the immediate needs of the victims in retrieving their important information.

Nina Olsen who works with an agency that helps such taxpayers with IRS related issues said that once the victims approach the IRS for help, they will have to routinely talk to multiple employees. All of this can take well up to six months before their issue is resolved.

The National Taxpayer Advocate that presented the annual report to Congress highlighted a number of problems that were consequently challenged by the IRS.

  • The main problem identified was that IRS uses their own regulations and procedures to identify such theft cases in 21 different units instead of making use of their Identity Protection Specialized Unit that is four years old and that can give them a more centralized approach.
  • Secondly, the IRS Taxpayer Protection Unit does not have the appropriate staff. This unit was created to receive calls from taxpayers whose tax returns had possibly been part of a fraud and having an understaffed unit means that they don’t have a high volume of calls from victims.
  • Thirdly, IRS believes that they have the Identity Protection Personal Identification Number which will protect the victims from the problem but the issue is that this unit does not cover all possible victims.

A 60 percent increase was reported by Olsen and the Taxpayer Advocate Service she was heading, in the number of taxpayers looking for help in stolen identity cases. Similarly, the National Taxpayer Advocate annual report revealed that 80 percent more cases were being reported to the IRS Identity Protection Specialized Unit in 2012 compared to 2011.

Olsen suggested that IRS should coordinate and handle all cases in a centralized manner using the Identity Protection Specialized Unit after giving it proper staff. They should also provide personal identification numbers throughout the year after determining the proper Social Security numbers and addresses of the victims.

Martin Press, a tax attorney in Fort Lauderdale believes that the issue is huge and is affecting people from all backgrounds. In response to the criticisms made, the IRS said that often the largest and complex cases are given to the best-staffed and equipped office and that they make identification of theft and assistance of victims, top priority. They admitted that they cannot prevent all identity theft crimes but they have made 2012 a solid foundation for improvement.

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