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ASK THE EDD LAWYER – IS THE BATTLE FOR CYBERSECURITY LOST?

By Robert S. Schriebman
April 21, 2016

Introduction

There are many articles on this website dealing with the hacking and stealing of taxpayer refunds and personal information. It was recently announced by the House Ways and Means Committee that tax crooks have stolen almost $16 billion of tax refunds. A few days ago it was brought to my attention that a local high-end supermarket chain handed over all 2015 employee W2 data to an imposter posing as a corporate executive. This caused each and every employee to file Identity Theft Affidavits to both the IRS and the FTB. These thieves are bold!

In mid April the big buzz on Capitol Hill concerned hearings before the House Ways and Means Committee on the battle for cybersecurity. The hearings were attended by IRS Commissioner John Koskinen and J. Russell George, Treasury Inspector General for Tax Administration (TIGTA). This article will discuss what went on during these proceedings. We will also discuss the introduction of new legislation designed to protect the American public from tax crooks.

How Bad Is The Problem

There was unanimous agreement during these hearings that criminal tactics aimed at stealing taxpayers’ identities and refunds are increasing; we are all more vulnerable than we were a few months ago. It was also unanimously agreed that the IRS and the Treasury Department have failed in their efforts to substantially curb these criminal activities. The growth and scope of cyber attacks are unprecedented according to Chairman Orrin G. Hatch, R-Utah. Thieves are continuing to steal billions of dollars. The Treasury Department set goals for the IRS to secure tools and systems to protect the American taxpayer, but the IRS has fallen short of its responsibilities, in the words of J. Russell George.

Commissioner Koskinen offered a presentation showing how the IRS, state taxing authorities and the electronic tax and software industries have all banded together to develop safeguards. However, things are not happening fast enough.

Money - We Need Money!

Commissioner Koskinen spoke about a special fund that the IRS has used in the past for emergency appropriations. This is known as the "streamlined critical pay authority." Normally this fund is tapped to hire experts in various fields. However, this program expired on September 30, 2013. Mr. Koskinen said, "It can [now] take four to six months to bring a new hire on board at the IRS." The fund has not been reinstated because Congress dropped the ball.

Senator Charles E. Grassley, R-Iowa, challenged the IRS Commissioner concerning two directives, in 2015 and 2016, from the Government Accountability Office (GAO) to institute a program to change passwords every 90 days. The IRS dropped the ball. Mr. Grassley asked Mr. Koskinen how much it would have cost the IRS to implement these directives. The Commissioner replied, "negligible." Senator Grassley expressed his frustration with the Commissioner’s response. However, the good Senator also admitted fault with his committee by failing to restore the streamlined critical pay authority.

New Legislation Introduced

On April 20, 2016, the Senate Finance Committee approved the Taxpayer Protection Bill of 2016. This bill is designed to help prevent identity theft and tax refund fraud with 18 separate provisions. There are other provisions in the bill designed to assist low-income taxpayers and to protect the public overzealous IRS collection tactics. As these raw provisions become finalized I will discuss them with you.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 40 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See "California Tax Collection Practice and Procedures" and "California Taxation Practice and Procedure," both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, "IRS Tax Collection Procedures – A Manual for Practitioners" published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, "IRS Tax Collection Procedures – A Manual for Practitioners" published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See "California Tax Collection Practice and Procedures" and "California Taxation Practice and Procedure," both published by Commerce Clearing House.

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