Our tax filing systems are not perfect! How does the IRS or a state tax agency really know if the person filing a return is the true owner of the taxpayer identification number used? In IRS Publication 1345, on procedures for authorized e-file providers, the IRS states that if the preparer/e-filer does not know the client, they should get two forms of verification (ideally picture IDs that include the client’s name and address (page 11 of Pub 1345)). That should help. What else is needed?
Perhaps all taxpayers need a PIN like they have for their ATM cards, debit cards, and bank websites. That should help as a person would not be able to file without both the SSN and the PIN. What about for paper returns? The IRS could hold up processing until they match the W-2 with one provided by an employer. Or will some type of biometric identification be needed in the near future?
Here is some information on recent security protocols of the IRS:
- IRS, How New Security Safeguards Will Affect You For 2017
- Melanie Lauridsen, AICPA Insights, ID Theft: Two Prevention “Hassles” Worth Your Time, 1/19/17
What do you think?
Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.
Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.
Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.
Prior to joining SJSU, Annette was with Ernst & Young and the IRS.
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