TaxByte 2016-4

IRS Ventures Back Online with Personal Information - Will These Systems Be Safe?

IRS intends to launch the new online taxpayer account system in late April 2016.   This launch is part of a plan to assist taxpayers and move forward with the “digitized tax” system.   The system will use an e-authentication process implementing an “out of the box” question mode similar to what was used by the "requesting transcripts online" system.  It is unknown at this time which platform the system will use as the transcripts and the IP PIN system’s platforms were breached and have still not been reinstated online.

The NEW e-authentication uses common knowledge and possession questions IRS has gathered from third party sources like credit bureaus and state databases.  The key is the taxpayer’s memory of certain personal identifying information that may span one or more years.   This is sometimes a burden to the elderly who have memory issues or even to the young who may not be keeping track of information needed to authenticate their identity.  Not everyone can remember what year they may have worked for someone or what bank they banked at for a certain period of time.  The system will also not be of much use to those who do not have internet access or mobile phone applications.  

The rollout of the new system will coincide with the full online access to the "Get a Transcript" tax record application.  That system has been down since May of 2015. But IRS has not provided the actual date the systems will be active. They are still testing the systems so we will have to wait and see.

How Will the System Work? 

Clients will have to create an online account.  If there is a “freeze” on their credit reporting agency account, the taxpayer must have it removed before he or she can access the system.   What is of concern is IRS will send an e-mail to the taxpayer about the requirement to remove the credit bureau freeze.  We have everyone trained that IRS does not send e-mails – NOW THEY DO?  It is unclear how a client will be able to tell whether the e-mail actually came from IRS or a scammer.

Once the online account is created, the taxpayer will be able to quickly look at their account and be able to resolve many common notice issues and correspondence.

Concerns about Cyber Identity Theft

We have campaigned over the last few years to educate our clients about identity theft.  Yet, IRS has been unable to stem the flow of fraudulent returns and the epidemic continues to grow.  The general public is more and more distrustful of websites, e-mails and other online access issues. Concerns about identity theft continue to grow, yet IRS continues on the path of more “electronic access.”  Is the new platform secure not only for the new system but also for Get a Transcript?  There is something to be said for getting your house in order before you move forward. 

We will wait and see first if the system is rolled out and second whether “Get A Transcript” comes back online.  It may be a while before we know if both systems are safe.