George: Non-IRS data can help combat tax-related identity theft

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Tax-related identity theft is a growing problem at the Internal Revenue Service. At the end of September the IRS had nearly 650,000 identity theft cases in its inventory, many with an average cycle time of over 6 months, according Nina Olson, taxpayer advocate at IRS.

Improved access to non-IRS data could help the agency get a better handle on the problem, said Russell George, Treasury inspector general for tax administration, during a Nov. 29 hearing before the House Oversight and Government Reform subcommittee on government organization.

"Access to additional information would assist the IRS in doing its job without necessarily requiring additional resources," he said.

Most recently the IRS gained access to the Social Security Administration's database that deals with 1099s, which has assisted in trying to stem tax cheats in the social security arena, said George.

The Health and Human Services Department has a national directory of new private sector hires. If there was a statutory change to allow IRS expanded access to that directory, it could better match withholding and income information provided by the taxpayer, suggested George.

In order to gain access to a broader set of data files, the IRS is working on a project called "real time," said Beth Tucker, deputy commissioner for operations support at IRS. It will ensure that documents are readily available for cross-referencing data once a return comes through the door. This filing season, the agency will test the project--fine tuning ways to gain faster access to data as well as testing the best application of data analytics and computing capability on that information.

But non-IRS government data can also create problems. Olson said SSA's death master file, which is made public, sold by the federal government and posted very soon after someone dies, contains a great deal of personal information.

Until access to the DMF is restricted, the federal government is perpetuating identity theft, said Olson. She added that legislation to restrict access to the file has been introduced in the House and the Senate, but she also believes SSA can restrict access without congressional action.

"People might not like that, they might sue, but FOIA law, the case law now under FOIA now recognizes the kind of exceptions to protect personal information," said Olson.

For more:
- go to the hearing page (includes archived webcast and prepared testimony)

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