Audit: IRS not screening lenders requesting sensitive taxpayer information

The IRS does not screen lenders who obtain sensitive taxpayer information through an agency program, putting that data at risk, a new audit found.

The Treasury Department’s inspector general for tax administration reported that the agency’s Income Verification Express Services program, which lately has processed more than 10 million requests a year, only requires that a lender submit an application and sign up for e-services to be able to receive streams of taxpayer information.

“Lending institutions generally require borrowers to authorize the IRS to release their tax information for income verification,” Russell George, the tax administration inspector general, said in a statement. “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.”

The audit also stated that information such as a taxpayer’s Social Security number becomes even more important to potential identity thieves if linked to income information that should be protected by the IRS. 

The inspector general made four recommendations to the IRS, all of which the agency agreed with. Those recommendations included to develop minimum requirements for the IVES program and to update the application for the program.