Treasury Inspector General for Tax Administration
March 30, 2011
TIGTA - 2011-17
Contact: Karen Kraushaar
WASHINGTON – The Internal Revenue Service (IRS) must ensure that sensitive taxpayer information is protected against improper disclosure when responding to requests from lenders, according to a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).
Taxpayers commonly request tax return transcripts to submit to their lenders so that they can obtain loans. The IRS uses the Income Verification Express Services (IVES) Program to process requests for information by lenders. The IVES Program processes more than 10 million requests for tax return information annually.
TIGTA evaluated whether taxpayers’ personally identifiable information is adequately protected against misuse. TIGTA determined that the IRS does not screen IVES Program participants to ensure they meet minimum standards and protect tax return information.
TIGTA recommended that the IRS develop and enforce minimum requirements for the IVES Program; update the IVES application to include a statement that taxpayer information can only be used for a limited purpose; obtain completed applications from IVES Program participants within one year of revising the Program; and revise transcript request forms to allow limited disclosure of taxpayer information.
“Lending institutions generally require borrowers to authorize the IRS to release their tax information for income verification,” said J. Russell George, Treasury Inspector General for Tax Administration. “The IRS should be able to assure taxpayers that it is taking every precaution possible to ensure their tax information is only used for authorized purposes,” he added.
The IRS agreed with all four of TIGTA’s recommendations and plans to revise current IVES Program practices.
To view the report, including the scope, methodology, go to: http://www.treas.gov/tigta/auditreports/2011reports/201140014fr.pdf.
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