IRS E-Services and the TIGTA Report

Is your tax data at risk from your tax preparer using IRS “e-services”? The Treasury Inspector General for Tax Administration (TIGTA) ponders that question in a recent study and concludes that “Insufficient E-Services Controls May Put Taxpayer Data at Risk.”

What Is E-Services?

E-services is an on-line IRS service that allows tax practitioners to do a variety of things on behalf of clients, on-line.

E-services is great because it’s far faster to submit a power of attorney on-line than to mail or fax it in. When I’m working on a case for a client, I can quickly and easily pull their transcripts using the on-line system.

But I never use e-services without first getting a power of attorney signed by the client.

And I only use e-services on cases where I am doing an in-depth work for the client that requires me to go to bat for them against the IRS. I don’t use it for routine amended returns. Nor do I use it for routine transcript requests, which the client can actually request, for free, themselves.

What’s the Problem?

Practitioners must receive signed authorizations from the client before using e-services to pull information on the client — and according to the TIGTA report, that isn’t always happening.

TIGTA surveyed taxpayers whose accountant had used e-services on their behalf. The survey showed that 92% of the time, their accountant had gotten proper authorizations ahead of time.

But in the survey of practitioners, TIGTA claims that only 64% of practitioners had gotten proper authorizations ahead of time. I think TIGTA is being a little misleading in this part, because it looks like they lumped in “no response” with “incorrect,” so if a practitioner didn’t respond to the TIGTA survey, TIGTA assumed something was done wrong.

At any rate, we can say that up to possibly 1/3 of the time, practitioners aren’t following proper e-services protocol by getting signed authorizations ahead of time.

Solutions

This problem isn’t nearly as big of a deal as our government publishing deceased people’s names, Social Security Numbers and dates of birth in a publicly accessible file. But it is a problem.

I think a simple solution would be to require a practitioner to submit a scanned copy of the signed authorization before they can access the taxpayer’s information. It’s a simple solution, and one that practitioners already deal with in other areas (for example, we already have to submit scanned copies of the e-file authorization when e-filing business tax returns).

I just hope the IRS doesn’t respond to this report by doing something heavy handed that makes e-services less accessible and less user friendly.

You can read the entire TIGTA report here.

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”

2 Responses to “IRS E-Services and the TIGTA Report”

  1. Rachel October 6, 2012 at 2:32 pm #

    IRS E-Services and the TIGTA Report

    IRS E-Services and the TIGTA Report

    I have spoken with the IRS in the past regarding a “wet” signed original 2848. I was told by an ETA director (before division changed its name) that the reason you didn’t need a “wet” signature for filing a POA on the DA is due to the e-authentication process. As opposed to the fax and file on CAF method. This is logical as IRS approved authentication is achieved for practitioner and taxpayer when submitted electronically through the DA system. Not sure why this has changed.

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