Senate Finance Committee 16 April Hearing — Tax Fraud and Tax ID Theft

The information provided by the witnesses in this hearing give multiple reasons to be encouraged by the actions being taken to combat refund fraud and help victims of identity theft.  Their written statements are available at:  http://www.finance.senate.gov/hearings/hearing/?id=62739085-5056-a032-5281-4500bf4d4fb3  The testimony of Steven T. Miller, Acting Commissioner of the Internal Revenue Service described a number of significant steps they have taken.

Of the multiple congressional hearings addressing the threat of tax fraud by identity theft, this is the first to suggest that real progress is being made.  By targeting the criminal through the use of appropriate filters, investigation and aggressive enforcement, the efforts of identity thieves are being thwarted.  Hopefully, by publicizing the results of successful prosecutions and the award of substantial penalties to the offenders, others may be deterred.

To the extent that the SSDI on genealogical websites was ever the source of compromised SSNs then used to file fraudulent tax refund claims, the responsible actions taken by those websites should have denied access to that information.  In fact, while it is only informed speculation on my part that we should have seen few, if any, fraudulent returns attributable to SSNs accessed from the SSDI during the filing season just ended, the IRS should eventually be able to statistically confirm that that vulnerability targeting the deceased has been closed.

In the March 20, 2012 hearing on this topic before a subcommittee of the Senate Finance Committee, RPAC and its sponsoring organizations indicated that while most genealogist could accommodate a three year delay before accessing the SSNs of recently deceased persons, there were several categories of genealogical research for which a three year delay would be problematic.  This topic is explored in the Statement for the Record submitted by IAJGS found at:  IAJGS Statement to Senate Finance Committee April 16 2013 Hearing Final

A careful review of the steps reportedly taken by the IRS, especially when coupled with the step taken by responsible genealogical entities historically hosting the SSDI on their sites,  suggests that tax fraud by this particular form of identity theft may no longer be the risk it was in 2011.  The need for statutory restrictions on access to the SSDI may have passed.

The RPAC Statement for the Record suggesting that conclusion is found at:  RPAC Statement for Record Senate Finance 16 April 2013 Final

The most significant vulnerability in the IRS on-line tax refund process has finally been identified. We should continue to be concerned that the SSNs of living persons will continue to be vulnerable so long as the IRS is mandated to expedite the payment of refund claims before they have even received information returns necessary to determine their validity.

This message is one we must share with our friends and elected representatives.

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