Curbing Tax Identity Theft and Fraud Is Focus of AICPA Testimony at IRS Oversight Board Forum

May 1, 2013

WASHINGTON (May 1, 2013) – The American Institute of CPAs (AICPA) focused its testimony at today’s IRS Oversight Board Forum on its suggestions about how to curb tax identity theft and fraud. 


“Some actions that we believe would reduce the threat of identity theft would require legislative or regulatory changes,” Jeffrey A. Porter, CPA, chair of the AICPA’s Tax Executive Committee, told the IRS Oversight Board.


He said the Internal Revenue Service’s (IRS) proposed regulations authorizing filers of certain information returns to voluntarily truncate a taxpayer’s identifying number is a “positive step towards protecting the privacy and security of personal information.”  Porter said the AICPA is pleased that the proposed regulations would make the truncation program permanent because the AICPA has supported making it permanent for several years.


In addition, Porter said, the truncation program should be extended to permit truncated Social Security numbers on all types of tax forms and returns provided to a taxpayer.  That would require a change in the law and he said the AICPA has recommended to Congress that it pass legislation so that truncated Social Security numbers could be used on W-2 forms.


“A fundamental tax administration goal for combating fraud,” Porter said, “is establishing one point of contact within the IRS for prompt resolution of identity theft cases,” as called for by former IRS Commissioner Douglas Shulman and National Taxpayer Advocate Nina Olson.  Currently, 21 units exist within the IRS to help victims of identity theft.


Porter emphasized that the IRS “should be provided with the proper resources to fund its mission, since the fight against identity theft fraud is taking a toll on IRS resources.”


He praised the expansion of the IRS Law Enforcement Assistance Program to help state and local law enforcement officials obtain tax return data vital to investigating identity theft cases and the continuing emphasis by the IRS on criminal investigations.


Increased staffing and training are key components of the fight against identity theft, Porter said.  “We believe the Service should continue to increase the level of staffing dedicated to identity theft cases and improve its training of agency employees to ensure the proper response and assistance for identity theft victims,” Porter said.

A copy of the testimony is available online.