IRS Under Fire After Destroying 30 Million Tax Documents

The Internal Revenue Service, struggling to deal with a massive backlog of paper filings, decided to “destroy an estimated 30 million paper-filed information return documents in March 2021,” the agency’s watchdog reported last week.

The IRS said in a statement Thursday that taxpayers “have not been and will not be subject to penalties resulting from this action.” It said that it processed 3.2 billion information returns in 2020 and that the destroyed documents are not tax returns but documents submitted to the IRS by third-party payors.

It added that 99% of the information returns were already processed and the remaining 1% of those documents “were destroyed due to a software limitation and to make room for new documents relevant to the pending 2021 filing season.”

The agency also said that “this situation reflects the significant issues posed by antiquated IRS technology.” The destruction of documents has sparked a backlash from tax preparers, with some reportedly concerned that the decision could hamper the agency’s ability to verify returns and trigger additional error notices.

“IRS management’s decision to destroy information return documents due to the processing backlog raised numerous questions regarding IRS’ decision making and risk assessment process,” Edward Karl, vice president of taxation at the American Institute of CPAs, said in a statement. “The IRS’ recent statement provided some of the answers, but American taxpayers deserve to know why this decision was made and how it might impact them.”

Rep. Bill Pascrell (D-NJ), chairman of the House Ways and Means Oversight Subcommittee, on Friday called for President Biden to replace IRS Commissioner Chuck Rettig, describing the document destruction as the latest black eye for the agency.

“The IRS is vital to public confidence in our nation and its Trump-appointed leader has failed,” Pascrell said in a statement. “The manner by which we are learning about the destruction of unprocessed paperwork is just the latest example of the lackadaisical attitude from Mr. Rettig.

This latest revelation adds to the public’s plummeting confidence in our unfair two-tier tax system. That confidence cannot recover if all the American people see at the IRS is incompetence and catastrophe.”

While the report doesn’t specify which information returns the agency chucked, the news has triggered angry responses from tax professionals, particularly after another difficult filing season.

“I was horrified when I read the report describing the destruction of paper-filed information returns,” said Phyllis Jo Kubey, a New York-based enrolled agent and president of the New York State Society of Enrolled Agents.

Missing information returns can cause a “mismatch” at the IRS, delaying refunds because the agency can’t verify details on a taxpayer’s returns, she explained.

While the eventual consequences of the decision are unknown, tax professionals have long complained about the stream of automated IRS notices, with limited options to reach the agency.

“If they’re not putting those into the system, there’s going to be discrepancies, which means potential notices that are sent out,” said Dan Herron, a San Luis Obispo, California-based certified financial planner and CPA with Elemental Wealth Advisors.

Although the IRS halted more than a dozen types of automated notices in February, Herron says the constant correspondence is still creating headaches for taxpayers and advisors.

“There were no negative taxpayer consequences as a result of this action,” the IRS said in a statement on Thursday. “Taxpayers or payers have not been and will not be subject to penalties resulting from this action.”

Brian Streig, a CPA with Calhoun, Thomson and Matza LLP in Austin, Texas, said the news was a “break of our trust,” pointing to the burden on the business community.

“Small businesses stress out every year in January trying to accurately prepare these informational returns and get them filed on time,” he said. “To see the IRS just destroy these is almost like the IRS admitting they don’t really care.”

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Taxes 2022: IRS Says This Year ‘Taxpayers are Getting Our Message’

An estimated 160 million tax returns are expected to be filed this year, according to the IRS, and so far, the tax season has been running smoothly.

The tax agency has processed 6.6% more returns compared with a year ago, though it has received 2.1% fewer returns so far from taxpayers.

And according to Ken Corbin, wage and investment division commissioner and chief taxpayer experience officer for the IRS, the tax agency is well on its way to improve taxpayers’ experience for the 2023 tax year.

“So far we’ve received over 91 million individual returns this year and we’ve processed 89 million returns,” Corbin told Yahoo Finance Live. “What’s great about that is that we’re seeing that more taxpayers are getting our message. We’ve seen about a 96% electronic filing rate, which is outstanding.”

Processed returns

The IRS is still grappling with an unprecedented paper backlog of millions of unprocessed returns – some dating back to last year.

As of March 31, the tax agency had 2.7 million unprocessed individual tax returns dating back to 2021 and 2.3 million unprocessed returns from the calendar year 2022. Under normal circumstances, the IRS has a backlog of 1 million unprocessed returns entering a filing season.

To reduce the chances of further delays, the IRS urged taxpayers to electronically file their returns this year. The agency has also doubled down on measures to hire and reassign workers to get through the pile of unprocessed paper returns.

The IRS also redesigned its online website IRS.gov to make it more user-friendly so taxpayers could navigate and find information easily. The tax agency also added a new individual account that allows taxpayers to keep track of their personal information and tax status.

“The pandemic has really given us an opportunity to sit back and think about the journeys of the taxpayer as they interact with the IRS,” Corbin said. “It’s an opportunity to be innovative but to also bring cohesion around how we administer the taxes… we’ve introduced new technology like voice and chat bots on our phone as well as IRS.gov. And we’ve implemented taxpayer experience days, where taxpayers can come into our offices and talk with us [on the weekend].”

File electronically

If you have yet to file your tax return this season, and want to avoid any substantial delays with your refund, you should file electronically.

National Taxpayer Advocate Erin Collins recently told Yahoo Money that filing a paper return could delay your tax processing for 10 months or longer. This can be a real set back if you’re waiting on a refund or the remaining portion – if not the complete amount — of your Child Tax Credit.

“Number one, file electronically and use direct deposit – there are lots of options out there, including our IRS free-file program,” said Corbin.

Folks that received an advanced CTC payment last year or collected unemployment were encouraged to use the IRS.gov personal account to check how much they received in aid before filing, so their returns wouldn’t be held for a manual review, said the IRS.

Take advantage of IRS resources

The IRS has implemented a variety of programs to help individuals file their taxes as zero cost.

“More taxpayers seem to be seeking help in filing their returns, whether they are going to a tax professional or even using our Volunteer Income Tax Assistance program, where we offer free tax prep for taxpayers,” said Corbin.

VITA programs are run each year by IRS-certified volunteers to ensure lower-income households can get the tax preparation and services they need to file accurate tax returns and get their refund. VITA resources can also help non-filers claim tax credits they may be eligible for, including the Earned Income Tax Credit, the Child Tax Credit, and any stimulus checks they may not have received.

Still, the IRS recognizes that there is still work to be done to avoid the jammed paper backlogs it is currently contending with.

“We have to be sensitive to those taxpayers whose returns have not been processed – it’s critical to them,” Corbin said. “There are refunds in those returns and there are other reasons why people need those returns processed either for financial aid for college students or to obtain a loan. What this means for these taxpayers is that their experience has been a challenging one.

But at the IRS, we’re all hands on deck. We have a plan so that we can get better than healthy by the time we get to the 2023 season.”Tax day is right around the corner and if you haven’t filed yet, putting together your return in a rush may come back to bite you.

“You should never rush through the process of having your tax return prepared because you want to make sure that your tax return is complete and accurate,” Daniel Geltrude, founder of Geltrude & Company, recently told Yahoo Finance Live (video above). “The last thing that you want is you file your tax return in a rush, and then in 30 days you get a nice letter from the IRS saying there was a problem with your tax return.”

If you need more time to file your tax return, you can request for an extension that gives you until October 15 to file your taxes. But you must file your extension request by the April 18 deadline.

If you owe the IRS and need extra time to file your return and to pay, then you need to request an extension to file and an extension to pay. If you owe and only request an extension to file, you may face penalties and interest on the amount you owe.

If you are filing by mail and are waiting until the deadline to pay, a postmark alone may not be sufficient.

“​​As long as the envelope is properly stamped by the due date — April 18th — sending your check through the mail at that last moment you’re okay,” Geltrude said, noting, “you should also do that by certified receipt to make sure that you can prove timely filing and timely payment.”

Working remotely and the home-office deduction

Due to the pandemic, many people worked from home. Unfortunately, working remotely from home doesn’t mean you qualify for the home-office deduction.

“If you are an employee getting a W-2 for the work that you do, you are not entitled to take those home office deductions as an employee,” Geltrude said. “You need to be an independent contractor having your own business to take all of those expenses related to your business activity as a deduction against your income.”

By:

Gabriella is a personal finance reporter at Yahoo Money. Follow her on Twitter @__gabriellacruz.

Source: Taxes 2022: IRS says this year ‘taxpayers are getting our message’

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Where’s Your Refund? Veteran Taxpayer Advocate Offers Tips On Dealing With The Mess At The IRS

The Internal Revenue Service entered this tax filing season severely backlogged and shorthanded—the result of decades of underfunding exacerbated by Covid-19 related strains. As of early last month, the agency had 23.5 million tax returns and pieces of correspondence awaiting manual processing, including some paper returns filed as far back as April of 2021.

Last filing season, 160 million of 195 million taxpayer calls to the IRS didn’t even get through; only 11 million callers got to talk with an IRS employee while another 24 million callers got automated answers.

Nina E. Olson, a tax lawyer and the founder and executive director of the Center for Taxpayer Rights, describes the current problems at the IRS as the worst she’s ever seen. And she’s seen a lot. From 2001 to 2019, she served as the IRS’ National Taxpayer Advocate—an independent voice within the agency charged with helping individual taxpayers and making recommendations to Congress for change.

Before that, she spent years representing clients and running a clinic for low-income taxpayers. The only thing that comes close to the current mess, Olson says, was 1985, when workers at tax return processing centers were struggling with a then new computer system (which is still in use) and fell so far behind that a few famously resorted to hiding returns in closets and in trash bags.

“That was the worst to date. And I think this filing season and the last filing season have really shown that it’s just far worse (now),’’ she said last week during a conversation for Forbes subscribers.

The good news is that the IRS’ problems won’t affect the majority of taxpayers—they can still file their 2021 1040s electronically and see their expected tax refunds appear in their bank accounts within a few weeks. (As of March 4th, the IRS had issued 38 million tax refunds averaging $3,401 each.)

But tens of millions of other Americans won’t be so lucky. The IRS itself has projected that nearly 21 million electronically filed returns could be delayed this tax season because of discrepancies related to changes Congress made in the refundable child and dependent care credits.

That’s on top of millions of other returns that will get kicked out of the IRS’ normal computer processing stream for some other reason—say, a suspected case of identity theft or fraud, a Social Security number that doesn’t match its records or a mismatch related to the 2021 $1,400 per person Economic Impact Payments i.e. stimulus checks.

Olson’s advice is built on her deep understanding of what information is and isn’t available from the IRS and where the worst bottlenecks are—mainly in the agency’s handling of paper, which suffered from Covid-19 shutdowns and restrictions and in the human intensive “error resolution process” which was been overwhelmed by all the Covid relief Congress doled out through the tax code. “Throughout all of 2021, it just never got caught up,’’ Olson says.

What information can’t you get from the IRS? Consider its much advertised “Where’s My Refund?” app. That service can tell you that your return was received, or your refund was approved or that a refund has been sent.

But it won’t tell you anything useful between the received and approved phase, Olson warns. It won’t, for example, tell you that your return was kicked out of normal processing for some discrepancy. (That could be why a pitiful 24% of “Where’s My Refund” users who took a survey last year found it helpful—down from 51% in 2019.)

Here’s another piece of Olson advice that’s particularly relevant this season. Back in December and January, the IRS sent a “2021 Total Advance Child Tax Credit (AdvCTC) Payments” statement—also known as a 6419 letter—telling families with children how much in advance 2021 child tax credits the IRS had paid them. (The payments, made monthly in July through December, were supposed to come to half of the benefits due.)

What if the IRS number is more than what’s shown in your own records—which could well be the case if, for example, you changed your bank account or moved late last year and the money the IRS thinks you got didn’t actually reach you? The IRS recommends you check online to see if it has a more updated number. And if the numbers still don’t match?

Olson recommends you file your return electronically using what you believe is the correct number. True, your refund will get kicked out of the normal processing stream and go into the error resolution system. And true, last year returns waited an average of 75 days in error resolution purgatory to even be assigned to a human being to work.

But the IRS has supposedly programmed its computers to automatically adjust more returns with discrepancies related to stimulus checks and child credits, so the delay shouldn’t be so long this year, Olson says. A key and little understood point, she adds, is you’ll get a refund from the IRS for the lesser amount it thinks you’re due, and eventually receive a “math or clerical” error notice from the IRS explaining why it has reduced your refund.

Why not send in a paper return with an explanation of why your numbers may be different than the ones the IRS has? “Who knows when a paper return is going to be processed?’’ she answers. And then, she adds, when it finally is processed, “probably what will happen is you’ll get a math error adjustment eventually on the paper return, they won’t have looked at your additional information you sent in, and you’ll have to send it in again.”

By filing electronically, she explains, you’ll get the part of your refund the IRS agrees with faster, and you’ll also get your chance to dispute the IRS faster.

About those math error notices—they’re really not about a mistake in calculation in most cases. What they are is the IRS using statutory authority Congress has given it to adjust the numbers on your return, without an audit and without contacting you first. The IRS might reduce your refund, say you owe more, or (if you’re lucky) give you a bigger refund.

If you disagree, it’s crucial you respond within 60 days asking the IRS to abate the change, Olson says. (She suggests you send your objections and any documentation supporting your case by certified mail, which provides you with a mailing receipt to prove you did this in a timely fashion.) Given the IRS’ own delays—no guarantee it will open your letter quickly—was is the 60 days important?

As Olson’s organization explains in a fact sheet, If you miss the 60-day deadline, you can still call or mail information to the IRS showing why you believe it is wrong. But you’ll lose the right to go to the U.S. Tax Court if the IRS continues to disagree with you, and if the IRS says you owe more money, it may begin trying to collect the tax due while it is still reviewing your documentation.

But who wants to hire a tax lawyer and go to court? You can file your suit in the U.S. Tax Court without a lawyer (there are instructions on the Tax Court web site for doing so), and without paying any disputed amount first, answers Olson. And if you do file a suit, your case will get kicked to an appeals officer at the IRS. “Tax Court is actually one way to get to that live human being,’’ she explains.

Speaking of live human beings—“I hate to say this,’’ Olson observes, but there are times when you should actually (deep breath) call the IRS. The IRS projects it will answer 35% of calls this season—an improvement but still not great. The point is there are times when reaching a human at the IRS can make a huge difference. For example, if the math error relates to a mistake your made when you entered a Social Security number, a human agent may be able to fix that with you over the phone, Olson says.

Or, if it’s a case of suspected identity theft, you may be able to establish you are the legitimate taxpayer over the phone, without having to wait for an appointment at an IRS office. In addition, if your refund has been delayed, but you haven’t gotten a math error notice yet, an agent may be able to tell you what the issue is and maybe help you fix it. (That depends on where your return is in the process.)

What about getting help from Olson’s old domain—the Taxpayer Advocate Service? Olson disagrees with a decision last November by current National Taxpayer Advocate Erin M. Collins to reject cases where the sole issue is the delay in the processing of an original or amended tax return—Collins took that action on the grounds that TAS itself was overwhelmed and that delays at the IRS were so severe that the IRS couldn’t give priority to some returns without slowing down processing of others.

Under pressure from members of Congress, who referred 66,000 cases to TAS last year, six times the annual number before the pandemic, TAS is now taking some cases involving processing delays of amended returns—particularly those, for example, involving employers’ quarterly payroll tax returns claiming the Covid-era Employee Retention Credit.

Olson recommends that if a delay at the IRS is causing you financial hardship you both contact your member of Congress and call TAS or fax in a request for TAS assistance (on a Form 911 and yes, the IRS still uses fax machines). There are some issues where TAS is definitely ready to help. For example, if you haven’t gotten your refund because you are the victim of identity theft, TAS will help you get an appointment to get it resolved.

“You’ve got to press on every single lever,’’ says Olson. “I really personally think you should be going to TAS and making them take your case. And I personally think you should go to the members of Congress.” Some constituent cases Congress sends to TAS do get help, she says, and members of Congress “can use that information to force change on a systemic level.”

She points out that the just signed new omnibus spending bill gives the IRS more money for taxpayer service (including $75 million taken from its enforcement budget to process backlogged returns). It also grants the IRS authority to speed up hiring of 10,000 new employees—if it can find them. That, of course, won’t be much help to taxpayers waiting now for their delayed refunds and getting no satisfaction from the “Where’s My Refund?” app.

The video of Olson’s conversation with Forbes is available to subscribers here.

I’m the Washington D.C. bureau chief and an assistant managing editor of Forbes. During my three decades with Forbes, I’ve reported extensively on taxes — tax

Source: Where’s Your Refund? Veteran Taxpayer Advocate Offers Tips On Dealing With The Mess At The IRS

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Critics:

By: Garrett Watson

Taxpayers and the Internal Revenue Service (IRS) are set to face a bumpy 2022 tax filing season, which the IRS announced will begin January 24th and run through April 18th. Two major challenges await taxpayers: a second year of navigating pandemic-related tax relief on their returns and IRS backlogs that may delay processing and refunds.

Over the past two years the IRS has dealt with such challenges as pandemic-related disruptions for staff and the need to quickly administer several large and complicated relief packages enacted through the tax code. The implementation issues at the IRS have exposed the trade-offs of using the tax code to administer social support, especially during the pandemic.

The American Rescue Plan Act (ARPA), passed in March 2021, provided pandemic-related aid to taxpayers through the tax code that can be claimed during the tax season and may affect the size of tax refunds for some taxpayers.

For tax year 2021 only, the ARPA expanded the value of the child tax credit (CTC) from $2,000 per child up to $3,600 for younger children or $3,000 for older children. It also eliminated the earnings requirement and work-related phase-in, expanding the number of households eligible for the credit.

Tax refunds will be impacted by the expanded CTC. Whether they raise or lower individual refund amounts compared to the past depends on individual circumstances, such as the advanced monthly payments last year that were worth up to half of the benefit.

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IRS Temporarily Halts These 10 Scary Taxpayer Letters

Internal Revenue Service computers keep spitting out perplexing letters and notices to taxpayers, and today the agency announced that it’s going to stop the machines, at least temporarily, in an effort to help taxpayers and tax pros. The 2022 tax season kicked off on January 24 for filing 2021 tax year returns, but millions of taxpayers are still waiting for the IRS to process last year’s returns.

Example: You filed your 2020 tax return last April. The IRS cashed your check. Why are you getting an alarming CP-80 Unfiled Tax Return notice that says: “We haven’t received your tax return. What must you do immediately? If you’re required to file, please file today. If you’ve already filed, please send a newly-signed copy.”

Savvy tax pros know that the IRS is woefully backlogged, and the best response is to wait it out. A California tax preparer who filed on paper with a check attached last April emailed me that he got a CP-80 notice last month. The IRS cashed the check, but hasn’t gotten to his return—10 months later.

His plan: “IRS thinks I have overpaid; I can wait 6 months to see if they catch up on paper.” In the meantime, the IRS has updated its web site, Understanding Your CP80 Notice, to tell folks who are getting CP-80 Notices who have already filed their 2020 returns: “DO NOT refile.”

That’s all the IRS needs—more paper! As of the February 7 update to the IRS Operations page, the IRS has made some progress on whittling down the number of amended tax returns for tax year 2020 in processing (2.3 million as of January 8), but it hadn’t updated the number of outstanding individual returns for 2020 (6 million as of December 31).

“The IRS is opening mail within normal timeframes and all paper and electronic individual refund returns received prior (emphasis added) to April 2021 have been processed if the return had no errors or did not require further review.”

That backlog is causing problems down the line. Hence, the decision — after outcry from tax professionals and members of Congress — to stop sending some taxpayer notices and letters for now.

The IRS announcement notes that these automatic notices have been temporarily stopped until the backlog is worked through, and that the agency will continue to assess the inventory of prior year returns to determine the appropriate time to resume the notices. Some taxpayers might still get these notices and letters in the next few weeks. “Generally, there is no need to call or respond.” But watch out: If you believe a notice is accurate and you have a balance due, the IRS says that interest and penalties can continue to accrue.

Here’s the rundown of suspended notices and letters:

CP-80 Unfiled Tax Return(s) 1st Notice: This notice is generally sent when the IRS credited payments and/or other credits to a taxpayer’s account for the tax period shown on the notice, but the IRS hasn’t received a tax return for that tax period.

CP-59 and CP 758 (Spanish version): The IRS sends this notice when there is no record of a prior year return being filed.

CP-516 and CP-616 (Spanish) Unfiled Tax Return(s) – 2nd Notice: This notice is a request for information on a delinquent return as there is no record of a return filed.

CP518 and CP618 (Spanish) Final Notice -Return Delinquency: This is a final reminder notice that the IRS still has no record of a prior year tax return(s)

CP-501 Balance Due — 1st Notice: This notice is a reminder that there is an outstanding balance on a taxpayer’s accounts.

CP-503 Balance Due — 2nd Notice: This notice is the second reminder that a there is an outstanding balance on a taxpayer’s accounts.

CP-504 Final Balance Due Notice/3rd Notice/Intent to Levy: The IRS sends this notice when a payment has not been received for an unpaid balance. This notice is a Notice of Intent to Levy (Internal Revenue Code Section 6331 (d)).

2802C Withholding Compliance Letter: This letter is mailed to taxpayers who have been identified as having under-withholding of Federal tax from their wages. This letter provides instructions to the taxpayer on how to properly correct their tax withholding.

Two business notices are also being temporarily paused.

CP259 and CP959 (Spanish) Return Delinquency: IRS sends this notice when there is no record of a prior year return being filed.

CP518 and CP618 (Spanish) Final Notice -Return Delinquency: This is a final reminder notice that the IRS still has no record of a prior year tax return(s)

A coalition of taxpayer professionals, the Tax Professionals United for Taxpayer Relief Coalition, including the AICPA and H&R Block, is calling for more. They’ve asked the IRS to pause all automated compliance actions and provide relief from underpayment and late payment penalties. Stay tuned.

Follow me on Twitter or LinkedIn.

I cover personal finance, with a focus on retirement planning, trusts and estates strategies, and taxwise charitable giving. I’ve written for Forbes since 1997. Follow me on Twitter: @ashleaebeling and contact me by email: ashleaebeling — at — gmail — dot — com

Source: IRS Temporarily Halts These 10 Scary Taxpayer Letters

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“Total tax revenues”. Our World in Data. Retrieved 7 March 2020.

“Taxation”. Britannica. Retrieved 3 March 2015.

About compliance checks, CC/FS1a, accessed 31 January 2022

Taxes for Revenue are Obsolete” (PDF). American Affairs. VIII (1). Archived from the original (PDF) on 14 March 2017.

“Definition of Taxes (Note by the Chairman), 1996” (PDF). Retrieved 22 January 2013.

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Land Value Taxation: An Applied Analysis. Ashgate Publishing, Ltd. p. 4. ISBN 978-0-7546-1490-6.

“TPC Tax Topics | Federal Budget”. Taxpolicycenter.org. Retrieved 27 March 2009.

The Annotated Constitution of the Australian Commonwealth

Taxes in the Ancient World, University of Pennsylvania Almanac, Vol. 48, No. 28, 2 April 2002

A World History of Tax Rebellions. Taylor & Francis. pp. vi–viii. ISBN 9780415924986.

The Rig-Vedic and Post-Rig-Vedic Polity (1500 BCE-500 BCE). Vernon Press. ISBN 978-1-64889-001-7.

Ancient tax collectors amassed a fortune — until it went up in smoke”. Nature. 14 September 2020.

History of the World in 100 Objects:Rosetta Stone”

Treasury Reconsiders IRS’ Use of Facial Recognition Company ID.me

The Treasury Department is reassessing the Internal Revenue Service’s use of third-party facial recognition software ID.me for access to taxpayer accounts amid growing concerns about the company’s privacy practices. A department official told FOX Business on Friday that Treasury and the IRS are exploring alternatives to ID.me. Bloomberg first reported the news.

“The IRS is consistently looking for ways to make the filing process more secure,” spokeswoman Alexandra LaManna said in a statement to FOX Business. “But to be clear, no American is required to take a selfie in order to file their tax return.”

The IRS had previously announced that beginning in summer 2022, users who need to log on to the agency’s website to access the Child Tax Credit Update Portal, check online accounts, get their tax transcript, receive an Identity Protection PIN or view an online payment agreement will need to create an account with identity verification company ID.me.

Existing online accounts, which currently only require a simple email and password to access, will no longer work beginning this summer, the IRS said. At that point, users will be required to create an account with ID.me.

The Internal Revenue Service (IRS) headquarters building in Washington.  (AP Photo/J. David Ake, File / AP Newsroom)

The IRS has stressed that individuals will not actually be required to go through ID.me or use facial-recognition software to submit their tax returns. But taxpayers will still be forced to use this software in order to take advantage of some of the IRS’ most basic tools. The agency is already urging taxpayers to create accounts “as soon as possible.”

“The IRS emphasizes taxpayers can pay or file their taxes without submitting a selfie or other information to a third-party identity verification company,” the agency said in a statement. “Tax payments can be made from a bank account, by credit card or by other means without the use of facial recognition technology or registering for an account.”

ID.me describes itself as a technology provider that offers secure identity verification by comparing a photo ID provided by users with a video selfie. It was launched in 2010 by military veteran Blake Hall and has quickly solidified its place in the identity-verification business, often on behalf of the U.S. government. Additional IRS tools will begin using ID.me verification “over the next year,” the IRS said.

Users must provide ID.me with an email address, Social Security number, photo ID and take a selfie with a camera that will scan the user’s face to verify their identity.

But the company drew fresh scrutiny this week when CEO Blake Hall admitted in a LinkedIn post that ID.me uses Amazon’s Recognition technology to compare video selfies submitted by users to its own, bigger internal database of previous applicants. Hall had previously claimed the company used so-called one-to-one technology, a process that compares a selfie taken by an individual to an official document like a driver’s license.

“I apologize for that,” Hall told Axios on Wednesday. “My intent is never to mislead.” LaManna noted that ID.me is compliant with the National Institute of Standards and Technology. The software is also used by multiple agencies across the government. 

Still, the news prompted an immediate outcry from privacy advocates, who have warned the practice is invasive and that the IRS is opening the doors to potential data breaches.

The decision “will only lead to further ruin for Americans when their data is inevitably breached,” Jackie Singh, director of technology and operations at the Surveillance Technology Oversight Project, wrote on Twitter. She called the practice “very bad,” and called on every “tech-aware American to fight it.”

Source: Treasury reconsiders IRS’ use of facial recognition company ID.me | Fox Business

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