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IRS Problems: Interim Letters Cause More Confusion as Opposed to Resolving Inquiries

August 31, 2011 By

The IRS internal rules require every inquiry letter sent to them by a taxpayer to be responded to within 30 days of its receipt. The rules also provide that should the department handling an inquiry be unable to provide a response within the set timelines, they should send an interim letter to the inquirer within the 30 day period to inform him or her that the inquiry is still being handled and to give the inquirer an update of the progress on the case. The intentions of this internal rule are noble. However, as was noted in an audit carried out by the Treasury Inspector General for Tax Administration (TIGTA), a group that reviews IRS problems, many of the interim letters are confusing to taxpayers and may not fulfill the intentions of this IRS internal rule.

The IRS has Many Formats of Interim Letters

The TIGTA undertook an audit in July 2011 to investigate the effectiveness of the IRS in handling inquiries received. According to the audit report, the IRS has over 70 different interim letter formats for different tax issues. The formats are for initial interim letters, second interim letters, follow up letters, acknowledgments, transfer of inquiry, apologies, closing letters, and many more interim correspondences. Depending on the matter being inquired and the delay by the IRS in handling the inquiry, a taxpayer can receive many of these interim letters in different combinations. Furthermore, since the interim letters are not resolution letters, they do not have information about the taxpayer’s tax account or direct answers to the inquiry. To the ordinary taxpayer, the content of the interim letters is confusing and unclear. Many taxpayers will not know whether they need to take action in response to the letter or what to do with the interim letters in general. In this case, many taxpayers either call the toll-free number to get clarification about the letter or send out another letter to seek clarification. This only results in the increase of inquiries sent to the IRS.

Interim Letters Not Sent as Per IRS Internal Rules

Another problem highlighted by the TIGTA audit was that the interim letters were automatically generated in a systematic cycle, which led to unnecessary interim letters sent out. From the samples that were used in the audit, 12% of the interim letters sent out from the Automated Underreporter Program department (one of the major departments that deal with client responses) arrived to the taxpayer after the issue had already been resolved and 29% were received 10 days prior to the issue being resolved. 29% of the first interim letters were sent out after 30 days of initial inquiry to the taxpayer, conflicting with the IRS internal rules. In the Accounts Management Function, another department that majorly deals with taxpayer correspondences, 19% of interim letters were sent within 10 days of the issue being resolved and 12% of the first interim letters were sent after the 30 day deadline. Furthermore, 20% of the inquiry letters received by the Accounts Management Function department were resolved after the 30 day time line did not have any interim letters sent as required.

Survey by the IRS Confirms the Interim Letter Issue

According to the TIGTA report, a survey carried out in 2010 by the IRS on the effectiveness of interim letters also revealed that most taxpayers did not understand interim letters and indeed, found them confusing. The IRS also noted that the interim letters were not being used to meet the objectives of the IRS of providing timely and accurate responses to taxpayer inquiries. Instead, the interim letters had become a way of buying time for the departments handling the inquiries. However, the IRS has yet to take action on the findings of this survey.

Recommendations by the TIGTA

Following the audit, TIGTA recommended that the IRS review its interim-letter procedures to ensure that the interim letters are sent in a timely manner and as per the internal rules. The interim letters should also be clear so the average taxpayer can easily understand its contents and should provide the taxpayer with specific information as to the progress of the inquiry and the expected time of resolution. The IRS agreed with the audit and also undertook to look into implementing these recommendations.

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Tax Relief: Retirement Plan Options for Small Business Owners

August 30, 2011 By

Most employees in the United States have organized retirement plans, usually set by their employers. The employers will usually offer Traditional IRAs or Roth IRAs, among other retirement plans, as benefits to their employers. However, for the self-employed and small business owners, setting up retirement funds can be more challenging. This is because the business owner has to decide a vehicle through which he or she will invest for retirement. There are various options available to the self-employed and business owners to enable them to save for retirement. Some options are complex and risky while others are straightforward. Some of these options are:

401(K) Option and Profit Sharing Accounts

Self-employed taxpayers and business owners can use 401k plans and profit sharing accounts to set up retirement accounts. However, many business people complain that these profit sharing retirement accounts are complex and need professional consultants to prepare. They may therefore, not be ideal for small businesses that cannot afford expensive consultants.

IRA Option

The IRA options are much easier and straightforward for business people and self-employed individuals. The 2011 tax code allows for a business owner to contribute untaxed funds to traditional IRA or pay after-tax funds to a Roth IRA and receive IRS tax free retirement distributions up to a cap of $11,500.00 a year. A business owner can also make contributions to a SEP IRA account up to a maximum of $49,000.00 for the 2011 tax year. A SEP IRA is set such that 25% of pretax profits or income go into a retirement account (before paying taxes). This retirement plan is ideal for people who receive inconsistent incomes and profits over the years and can save more or less depending on the year’s performance. The limitation of using the IRA option is that if the business person has employees, he or she must provide the same benefits to these employees, which can be quite costly.

Sale to a Grantor Trust

The sale to a grantor trust is a more complex retirement plan and is ideal for business people who have significant wealth. In this plan, the business person gets a registered evaluator to appraise the business. The business owner then sells a portion of the business to his or her children at a significant discount to be repaid over a period of time. The portion sold to the children is administered under a trust estate. Given that the threshold for estate gifts has been raised from $1 million to $5 million for the 2011 tax year, the business owner can provide the discount without paying any taxes, as long as the discount is within this threshold. The spouse of the business owner can be a trustee of the estate and this way, he or she can have his or her health care, regular maintenance, and educational costs covered under the estate. The repayment of the business from the children’s estate can then act as the retirement plan. The estate can continue to repay these funds over a long period of time.

Loan Option

Another option in use by business owners is taking a loan against the business to put the borrowed funds into a retirement fund. If a business person feels that he or she lacks the discipline to invest into a retirement fund over the years, he or she can take a loan to be repaid by the business and the loan proceeds can be used to set up a retirement account. This is a risky way of setting up a retirement account, as the business may fail to repay the loan and the retirement fund is then liquidated to repay it.

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Beware of Scams: Fraudulent Emails can cause IRS Problems

August 29, 2011 By

According to the Treasury Inspector General for Tax Administration (TIGTA) report on the 2010 tax returns, one of the fast raising issues relating to taxes is identity theft. There are many cases of taxpayers’ identities being used to defraud the IRS of tax refunds. This leaves the genuine taxpayers waiting for lengthy periods of time as the IRS has to sort out the mess (and in many occasions, the IRS unable to retrieve the defrauded funds). The increase of the identity theft crime has been enhanced by widespread use of modern technology, including the internet. In fact, between 2008 and 2010, there has been a five-fold increase in identity theft tax fraud cases.

There are various ways in which the identity thieves get personal information from taxpayers unawares. However, one of the more common ways they “phish” for information is by sending random emails to people, informing them that some information is needed by the IRS to complete certain transactions. These phony emails will even come with an “irs.gov” email address to give it a genuine appearance. The IRS has warned taxpayers against such correspondence, claiming that it is a system hack. They have provided information on their website to help taxpayers avoid identity theft.

For starters, the IRS does not communicate through email and will never ask for any information from you through email correspondences. They will either send a physical letter or make a telephone call if they need any personal details. You can also verify any correspondence that comes from the IRS by calling their official telephone number and seeking verification. If you receive any emails that claim to have come from the IRS, you can forward the email to phishing@irs.gov to enable the IRS to investigate further regarding the source of the email. Do not open any attachments or click any links, as such an act can cause various viruses to infiltrate your computer, allowing access to your personal information and data. Some of these viruses can spy on your personal information, interrupt online banking activities, or other gain access to other financial transactions or information.

Recently, there have been spam emails that are being circulated to random email addresses. The email will typically have the heading, “IRS Tax transfer rejected,” “Federal Tax transaction canceled,” “Rejected transaction – Federal Tax payment,” or other such related topics. The email has the official IRS logo and comes with an irs.gov email address. The email has a rejection reference number and asks you to either open a link or download a document to find out more about the reason for the rejection. It is advisable not to open the attachment or click on the link, as it is suspected to be a computer virus. The fraudulent email is similar to one that was being sent out last year targeting small businesses that was linked to a virus. The virus interjected various operations, including online banking. To avoid being scammed into these tricks, simply delete any email that claims to come from the IRS and call them directly to verify whether or not they have attempted to contact you about any IRS tax issues.

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Support Records You Should Retain in Case of an IRS Audit

August 26, 2011 By

Filing your taxes can be such a demanding process and it is quite a relief when the process is over and done with. However, it would be counterproductive to successfully file your taxes only to be unable to prove them in case of an IRS audit because of missing documentation. Therefore, it is important to retain various documentation as long as they are needed. Various support documentation for your tax returns will be required for several and specific periods of time. Some of the documents that you will need to keep are:

  • Tax Return Acknowledgment – A tax return acknowledgment is your evidence that you indeed, filed a tax return. If you sent your tax returns by registered mail, you should keep the IRS acknowledgment receipt for as long as possible. If you submitted returns electronically, print the returns acknowledgment from the IRS website. The IRS can seek an audit for as far back as they wish if you did not file any returns at some point or if you have no evidence for such returns. Therefore, it is advisable to keep these returns acknowledgments as long as possible.
  • Exemption and Deduction Documentation – If you had any tax exemptions or deductions that you claimed in your returns, you should keep any support documentation for at least 3 years (because the IRS may audit your tax returns up to 3 years after your returns). However, if you understated your earnings in your returns by 25% and over, they can seek an IRS audit up to 6 years after returns.
  • Property Purchase or Sales Documentation – If you made a property purchase or sale, you should keep all the sales records, including your sales contract, legal documentations, receipts, invoices, and any other relevant documents. A property purchase or sales IRS audit can go back 4 years and therefore, you should retain these documents for at least that period. Furthermore, such purchase documentation will be needed for property gains tax reduction if you ever sell the property.
  • Bank Records – You should also keep all bank related documentation such as bank statements, credit card statements, electronic banking print outs, and money transfer documentation for at least 3 years from time of filing.
  • Investments Related Records – Besides bank records, you should also keep any securities and investment related documentation such as stocks records, brokerage statements, insurance and mutual funds records, investment product documentation, and any receipts for payments made to these investment managers for the same period of at least 3 years.

It is advisable to keep a storage area where you keep these records that can be required in case of an IRS audit. You can also keep an electronic copy of the documentation for quicker referencing.

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Will Free IRS Tax Preparation Software Save the Taxpayer?

August 25, 2011 By

Every now and then, various lawmakers propose a move to have the IRS provide free tax preparation software to the public to save the taxpayers from the money spent on hiring professional tax preparers. The most recent proposal was advocated by Sen. Mark Kirk and Sen. Dick Durbin in mid 2011. The lawmakers argued that taxpayers spend a lot of money hiring tax preparers and this can all be avoided if the IRS were to provide free tax preparation software to them. However, even though such a move would help many taxpayers prepare their tax returns, there are still some arguments against this line of thought. Some of the arguments posed by the opponents of the proposal are:

  • Complex Tax Code – The tax code has been changed so many times since the tax law was enacted in 1913. In fact, the tax code has been significantly altered 28 times since 1913. Besides the significant alterations, every year, Congress passes various modifications and alterations to specific aspects of the tax code. This has made the tax laws very complicated for the average taxpayer. In fact, some of the tax provisions remain unclear even to tax professionals and the IRS staff. In fact, because this is such a significant issue, the Treasury Inspector General for Tax Administration (TIGTA) releases a report every year that reveals large sums of taxpayers’ money lost annually because of a misunderstanding of the tax code. Therefore, the main reason that taxpayers will go to tax preparers to file their returns is because of the complexity of the taxes (as opposed to the convenience of preparing the taxes via proxy).
  • IRS Budget Cuts – Another argument against provisions of the free software by the IRS to taxpayers is the budget cut on the IRS’s resources. The House Appropriations Committee’s subcommittee on financial services reduced the IRS budget for the 2012 fiscal year. The committee approved a budget lower than that of 2011 on the pretext that the Federal government needed to cut on spending, owing to the large Federal deficit. The IRS may even be forced to cut jobs and to place a hold on its various expansion plans. Therefore, introduction of free tax preparation software for taxpayers may be least of their priorities at the moment. The free software will cost funds that the IRS simply cannot afford to exhaust; they will have to spend more funds to train taxpayers on how to use the free software if such a move were to be commissioned.
  • Too Much Information to the IRS – According to various surveys conducted in the past, many taxpayers avoid any direct interactions with the IRS because of their unwillingness to divulge a lot of personal information to them. Tax-preparation software will require the taxpayer to provide a lot of their financial information to assist them in preparing their tax returns. Therefore, many taxpayers would avoid using the free tax software from the IRS in the fear that the IRS would get too much of their personal information.
  • There is Free Tax Preparation Software Already – Another argument against the launch of free tax preparation software by the IRS is the fact that there is already free preparation software available. The Free File Alliance and Vita Software have been providing free filing services for a while. If software were truly the issue, then many taxpayers would not pay for professional preparers and instead, go for these free software (which is not the case). This underscores the fact that tax complexity, and not software convenience, is the main limitation for taxpayers and highlights their preference to seek professional tax assistance.

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Filing Federal Income Tax is Getting Easier – and it’s Free

August 24, 2011 By

The IRS is making it easier for taxpayers to file their federal income tax returns. This year, you may be able to file your 2010 taxes using free tax software directly through the IRS website.

If you made $58,000 or less in 2010 in taxable income, you will definitely be able to find tax software that you can use on the IRS website. The software is available to certain taxpayers, depending on income, state of residency, and age. You will find the software at http://www.irs.gov/freefile. Some filing options are also available in Spanish.

Once you select which third party company you want to use, you will be directed away from the IRS website and to that company’s website. There, each software program has step-by-step processes to follow to complete your tax return. The software will ask you questions to qualify you for the appropriate tax form, which it retrieves for you to fill out. It will also help you find some tax breaks, such as the popular Earned Income Tax Credit.

98% of Free File users have been satisfied with the product and recommend its use to others. 30 million tax payers have used Free File since 2003. If you combine Free File with direct deposit, you may receive your return in as few as 10 days!

Free File uses secure technology to protect taxpayer information. If you make more than $58,000 or are comfortable filling out the forms on your own without the assistance of tax software, the IRS offers Free Fillable Forms. These forms, also available at http://www.irs.gov/freefile, do not come with software assistance, but do basic math calculations. While some Free File software companies offer state tax return assistance, Free Fillable Forms do not. However, e-filing with this method is free and suits the do-it-yourself taxpayer who prefers paper tax filing.

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IRS Removes Controversial Two Year Limitation on Innocent Spouse Relief

August 23, 2011 By

The IRS has made a historic removal of a two year limitation rule the Innocent Spouse Relief starting July 2011. This removal of the 2-year rule applies for most qualifying taxpayers seeking to get protection under the relief. Prior to this tax code change, those seeking to be relieved from tax obligations through the Innocent Spouse Relief had to do so within two years from when the IRS contacted the spouses for collection. In practice, many spouses who were innocent to the tax liability because they were either unaware of the due taxes or were in abusive marriages (and could not refuse signing because of duress or pressured influence) could not qualify for relief because of the time limitation. One reason for this is that if the IRS contacted the “guilty” spouse for collection, he or she may conceal this from the other “innocent” spouse and thus, the innocent spouse would remain unaware of the collection process. When the “innocent spouse” finally becomes notified of the back taxes being collected, often times, it would be past the two year time limit and therefore, too late to claim the relief. However, with the removal of the 2-year time limit, many innocent spouse will now get their relief with no time constraints.

Time Limit Still Applies for Some

The IRS however, maintained that the two year rule will still apply for spouses who became aware of the IRS collection within the two year time frame and did not take any action. This rule however, will not apply for any spouse who is or was in an abusive marriage.

About Innocent Spouse Relief

The Innocent Spouse Relief is a tax relief provided to spouses who file taxes jointly with their partner. The current rules for the relief were introduced into the tax code in 2002. According to the tax code, when a couple files taxes jointly, they are both held responsible for the information in the tax return and should an issue arise from the tax return, they are both held liable individually (and the IRS can collect the back taxes from either or both of the spouses). However, under the Innocent Spouse Relief, if a spouse is unaware of false information claimed on the tax return (and the IRS discovers the false information in the returns), the spouse can be absolved from the consequential tax liability that may arise. The innocent spouse will need to file IRS Form 8857- “Request for Innocent Spouse Relief Form” and provide an explanation of their innocence in the tax liability. If there is enough evidence to show that the spouse could have been unaware of the due taxes or forced to sign the tax returns against his or her will, the IRS will relieve the spouse of the taxes due.

The Scope of the Relief

The IRS receives on average about 50,000 Innocent Spouse Relief applications every year. They however, reject close to 2,000 applications for the lapsing of the two year limitation. However, with this new inclusion to the tax code, many of these victims will now receive justice and get the relief. The IRS has stated that this new rule will take effect immediately and any cases that are still under review will now be considered under this new rule. Any spouse who had been denied the relief because of the time limitation prior to the announcement can now reapply for the relief.

Action towards Removal of the Time Limitation

The removal of the time limitation on the Innocent Spouse Relief came after a spirited campaign by politicians and activist groups. The opponents of the former two year rule argued that the limitation cut off many innocent spouses from getting justice. Earlier in 2011, a group of House Democrats wrote a letter to the IRS commissioner, seeking the IRS remove the two year time limit. This followed many debates and discussions on Capitol Hill and the media that sort to have the IRS remove this rule. After all of these tremendous efforts, the changes have come as a welcome relief to many.

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IRS Taxes that Affect Land Ownership

August 22, 2011 By

Various land related expenses are treated differently depending on the use of the land and whether the land is improved or unimproved. These expenses include land rates, association fees, and other land maintenance expenses.

Unimproved land

In taxation terms, improved land is land that has a structure on it, such as a building. A piece of land is considered unimproved if it has no buildings on it, even if you bring in utilities such as water, electricity, fencing, and/or a sewage system. As long as there is no structures that can be used for economic purposes or personal housing, it is considered unimproved. For unimproved investment property land, one cannot deduct ongoing expenses. However, you may add the cost of the various one-off capital expenses that you apply to the land to the value of the land and depreciate it if it is an investment property (as opposed to a personal property). If it is personal property, you can add the amount of such expenses used to improve the land to the cost of the land, which will increase your cost price of the property if you were to ever sell it. This way, the capital gain on the property will be lowered and you will consequently pay less in capital gain IRS taxes.

Improved Land

Improved land is land that gives you some utility in one form or another. You may have a personal home on the land or some rental or investment property. If it is an investment property, then the land rates and land expenses are an allowable business expenses and are therefore, deductible for tax purposes every year that the expenses are incurred. Most of the land-servicing-expenses are not deductible for personal-use land.

Investment Property Land

For investment property, any association and property maintenance expenses are tax deductible. The details of qualifications of these deductible expenses are contained in the Internal Revenue Code Section 212. These expenses are a miscellaneous itemized deduction and therefore, follow the rules of itemized deductions. This means that you must add all itemized expenses and subtract 7.5% of your Adjusted Gross Income before deduction. You also cannot deduct this through itemized deductions if you are under the Alternative Minimum Tax (AMT). However, for those under the AMT and for those who do not itemize deductions, you can still add these expenses to the cost of the land so as to reduce on the capital gains (in case you ever sell the land). This option is called, capitalizing carrying charges, and is a choice available for those with an investment property. However, if the investment property is unimproved, you can only capitalize the carrying charges for only one year. If you opt to capitalize the charges, you will need to attach a statement to your tax return form explaining the expenses that you are capitalizing in the year you choose to do so.

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Claiming Qualified Long Term Care Expenses as Medical Tax Relief and Deduction

August 19, 2011 By

Under the Federal tax code, long-term care services provided for medical reasons are an allowable expense to deduct. However, according to Sec. 7702B(c)(1) of the Federal law, a licensed physician must prescribe such care as being fundamental for the well-being of the patient. Long-term care deductions allows for people who have chronic diseases and conditions of incapacitation to receive long-term care, including an attending nurse or caretaker, without paying taxes for such services. There are various rules and qualification guidelines that govern the application of this IRS tax deduction.

Qualification Requirements

The long-term medical care can only be claimed by taxpayers who itemize their tax deductions as opposed to using standard deductions. You therefore, need to use the right Form 1040 to benefit from these long-term care expenses and have them deducted. The expenses also need to have support documentation. The person claiming the deduction must maintain the doctor’s statement that prescribed the long-term care, including the diagnosis of the medical condition. Besides the doctor’s statement, one also needs to keep the receipts or payment vouchers for such medical care. All other tax requirements, including withholding of taxes for any employees involved in the long-term care, need to be adhered to.

Itemized Deduction

Itemizing of tax deductions is more complex than taking the standard deductions route. A taxpayer itemizing deductions needs to schedule all the tax-deductible medical expenses that need to be itemized and determine if the expenses exceed 7.5% of his or her Adjusted Gross Income (AGI). Therefore, for itemized expenses to qualify for deduction, a taxpayer must have above this 7.5% threshold in total medical expenses. There is however, no cap or maximum for these itemized deductions.

Case in Point – IRS vs. Estate of Baral

In some instances, the IRS has differed views with taxpayers on what qualifies as long-term care as prescribed by a physician. This was the case for Lillian Baral, who had been diagnosed with dementia. The doctor recommended long-term care and Baral’s brother, who was her financial trustee, employed two caretakers to attend to her. The condition of her illness deteriorated her mental and physical capacity and she finally succumbed to her infirmity in 2008. Due to her condition, she did not manage to file a return in 2008 for the 2007 tax year. Since no tax return was filed, the IRS decided to use their estimate and determined that she had earned incomes of $94,229.00 and had underpaid taxes by $17,681.00. However, in their calculations, the IRS did not allow for the inclusion of her long-term care expense – Baral’s brother had paid $49,580.00 to the caretakers and had also reimbursed expenses of $5,566.00.

The issue was referred to a tax court to determine if the IRS was just in their actions. In the ruling, the court held that the wage payments to the caretakers qualified as long-term care for tax purposes and that the IRS was out of order to have these expenses excluded for tax deductions. The court however, held that the reimbursed expenses could not pass for the deductible of long-term care expenses as there were no receipts (support documentation) to support these expenses.

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Are there IRS Problems with Protecting Taxpayers’ Information?

August 18, 2011 By

One of the issues that have remained at the forefront of the IRS agenda for 2011 is identity theft. Identity theft has been a growing issue for the IRS over the years and especially so, as more people are making the transition from paper filing to e-filing. However, the identity theft crisis with the IRS was highlighted by a several reports in 2011 that drew significant attention towards the way the IRS was handling taxpayers’ information. Could there be IRS problems with protecting taxpayers’ sensitive information?

Government Accountability Office Report on Identity Theft

A Government Accountability Office report on tax-related identity theft that was released early 2011 revealed that there were over 245,000 cases of identity theft in the 2010 tax returns. This may seem like a small number, especially when you consider that about 100 million taxpayers filed electronically in the same year. However, what was alarming about this GAO report was that the cases of identity theft had grown 5-fold only between 2008 and 2010. What was even more disturbing about this report was that the IRS had not prosecuted the tax thieves on a majority of these cases of identity theft.

House Report Hearing on Identity Theft Victims

Following the GAO report, the House Committee on Oversight and Government Reform arranged a meeting with victims of the identity theft to hear their grievances. Many of the victims of the identity theft complained of ill treatment by staff members of the IRS. Following this committee hearing, the IRS came under immense attack on the way it handled issues of identity theft. Some of the victims complained that they had to repeat the same thing over and over again to different IRS staff. Some claimed that they had to constantly follow up with the IRS for many months before they saw their tax refunds.

TIGTA Report on Information Security in the IRS

To add the proverbial insults to injury, a report released in July 2011 by the Treasury Inspector General for Tax Administration (TIGTA), an IRS watchdog, revealed that taxpayers’ information sent to the IRS was vulnerable to hackers due to some security lapses. According to this report, 2,200 databases used in 13 of the primary IRS software used to process taxes had security lapses that may create loopholes for both internal and external information hackers. These databases operate on some outdated software programs that are not updated in their security features. The report also revealed the IRS did not fully install a security surveillance and compliance testing software that cost $1.1 million. The failure to fully implement this software means that the IRS is not fully aware of the risks that it is exposed to in its information databases. According to the IRS, the incomplete installation of this security software was brought about by complications that arose from multiple implementation of the same software. The report also noted that the database’s management was loosely handled by different offices and that there was no single IRS office that was charged with the duty of configuring and securing these databases.

IRS Response to the TIGTA Report

In response to this TIGTA report, the IRS admitted that indeed, there were security lapses in their information databases. However, it insisted that none of these 2,200 databases contained taxpayers’ information and that the information was safe. The IRS said that these databases were for internal use only and were not accessible from outside the IRS. They also said that in spite of the risks associated with these databases, there had been no information breach. They noted that information security was an ongoing process and that continuous procedures were underway to constantly ensure that taxpayers’ information remains safe. The IRS also agreed to to implement the seven recommendations that were included in the TIGTA report towards ensuring better information safeguarding.

Going Forward

As the IRS continues to receive increasing pressure on its management of identity theft and the handling of electronic taxpayers’ information, the public awaits to see whether this will impact the alarmingly growing trend of identity theft.

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