Identity Theft through IRS Correspondence

By Lee Bellinger / November 4, 2015

The Internal Revenue Service recently demonstrated just how much it cares about protecting taxpayers’ privacy. For many years, privacy advocates and even watchdog agencies within the government have warned that the agency’s policy of printing taxpayer Social Security Numbers on mailed correspondence invites identity theft. So what has the IRS done about it? Virtually nothing. And crooks have figured this out, big-time.

In October, a report by the Treasury Inspector General for Tax Administration found that the tax-extracting agency “has made limited progress reducing the unnecessary use of Social Security Numbers (SSNs) on forms, letters, and notices…” Why? “Because the IRS has deemed other projects more critical.”

IRS Refuses to Implement Taxpayer Privacy Safeguards Until It Gets More Money

So far, the IRS has removed SSNs from only 2% of the 2,749 types of letters it sends out. IRS officials claim they need a bigger budget in order to be able to stop printing taxpayer Social Security Numbers. That’s right, they are holding your basic privacy rights hostage to getting funding increases from Congress!

All of this brings up the issue of whether it’s better to file tax returns and make payments to the IRS electronically. It’s a tough call, in part because it’s difficult to assess the privacy risks of leaving an electronic trail containing your tax information.

The IRS would certainly prefer that you file electronically. That makes it easier for IRS computers to automatically read and flag returns for possible audits. Why make the IRS’s job of compiling information on you easier?

An All-Electronic Economy Would Enable the IRS to Track Everything

IRS officials would ultimately like all financial transactions to be electronic so that they could be monitored and tabulated by IRS computers. Someday, the IRS could have so much information about you that it could simply prepare your return for you and send you a bill.

The reality is that electronic filing is an enforcement tool for the IRS. To the extent that you can avoid making electronic financial transactions and avoid filing electronically, you’ll make it a little bit harder for the IRS to gather and assemble information on you — information that could most definitely be used against you.

There may, however, be some advantages to filing electronically. Your return cannot be lost by the Post Office, intercepted by a mail thief, or mishandled by IRS paper pushers. However, by using certified mail (or better yet, registered mail), you can get proof of when the IRS has received your return. With a certified mail return-receipt, you can avoid penalties the IRS may try to impose if it says it never received your return.

Post Office Bungling Causes Mail Delivery Fumbling

First Class mail in the United States is becoming more like second rate. The financially troubled Post Office is restructuring, supposedly in pursuit of greater efficiency. But Americans are experiencing a surge in Postal inefficiency.

The Washington Post reports late-arriving letters have increased nearly 50% in 2015. Even “measured against the agency’s own newly relaxed standards,” the U.S. Postal Service is exhibiting a 38% drop in performance this year.

Hardest hit by the Postal meltdown are those living in rural areas. It’s more expensive to deliver mail to the countryside. So the Post Office has decided to become more “efficient” by cutting its capacity to serve rural customers.

If you’ve experienced delays recently in receiving Independent Living or other publications, the Post Office is likely to blame. We do occasionally run into processing delays with our bulk mailing service, but that’s the exception. Postal delays are increasingly the rule.

Mail Forwarding Cautions and Options

Mail forwarding and other services are also deteriorating. When you move, the most efficient way to get your mail at your new address isn’t by filling out a Change of Address form with the Post office. If possible, change your address directly with everyone you know and do business with.

You may still want to have mail forwarded in case people try to reach you at your old address. If you do opt to tell the Post Office to forward your mail, there are good reasons to avoid checking the box marked “permanent” on the Change of Address form. Doing so will mean your information will remain on file in USPS’s national database, which can be accessed by
commercial mailers and possibly by private investigators. Instead, make your address change “temporary.”

You can also have your mail forwarded to a mailreceiving company. That will keep your new address private. Some mail-opening services will scan your mail and enable you to read it wherever you have an Internet connection. Two companies that offer this service:

• Mailbox Forwarding
• Traveling Mailbox

Although security measures are taken by these mailbox services, you do assume some privacy risks with them. You also eliminate other privacy risks, such as family members, neighbors, or area mail thieves getting into your mail. Directing sensitive mail to a secondary address and then accessing it over the internet can give you a privacy buffer. You can also accomplish this by establishing a conventional physical mailbox at a mail/ packaging store or a nearby Post Office.

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