Identity Theft Tax Paper

Posted on June 6, 2013 by William Olney in IRS, Tax | Comments Off

The following is a paper that I wrote regarding identity theft and some of the measures that could be taken to prevent it in the income tax world.

Identity theft has become a major problem in recent years as related to income taxes. The IRS has attempted to adapt its system to assist these individuals however currently anyone who has an identity theft problem often has to wait months before the issue is resolved. My suggestion is for the IRS to create a new department in the Services and Enforcement division to handle identity theft.

The IRS currently is not adequately protecting confidential data. (Banoff S. I., 2007, pp. 189-190) A few of the IT controls that could be implemented are encrypting all computers and adding access control software to the computers. With the encryption software only the authorized users would be able to access the returns and all private data on the computer, this is currently partially implemented. My suggestion for improving the system would be to have the entire computer be encrypted so that the users do not need to remember to encrypt data it just all would be as soon as it reached their hard drive.

IRS Targeting Scandal

Posted on May 27, 2013 by William Olney in IRS, Tax | Comments Off

Was the targeting by the IRS unreasonable? Yes it was because both liberal and conservative groups use the 501(c)(4) organizations to hide their donor lists.

This should show us that there is a major issue with how campaign finances are handled as well as the more obvious issue of the IRS’s management and which organizations are targeted for scrutiny. The main issue that I see with 501(c)(4) organizations is that there is no defined limit for how much of their finances, time and efforts can be used for political purposes.

Reg. 1. 501(c)(4)-1(a)(2)(i) provides that: [A]n organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the community.

My interpretation of this is that at a minimum less than half of its time should be spent on political purposes. However because this is ill-defined how can the IRS test to see if any of these organizations are following the rules?

Also these organizations were originally formed to create unions and other similar institutions which would have a minimal political role at most 10%. I believe that these organizations are being incorrectly used to hide donor lists.

In order to fix this a decision needs to be reached on how to measure how much time, money, effort can be spent on political purposes and how to monitor these organizations going forward. One potential restriction that could be placed on this type of organization is a limit on how much they can donate to political campaigns at a fixed amount such as one million dollars.

Sources:

Many different news articles I will list a few

The IRS Scandal and Donors WSJ– May 24, 2013

IRS testimony to House Committee Oversight and Government Reform committee– May 22, 2013