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Fraud & Identity Theft

Senator Voices Concern of Taxpayer Fraud During Government Shutdown

United States Senator Ron Wyden (D-OR) on Friday expressed concerns that the federal government shutdown could expose taxpayers to various risks. 

United States Senator Ron Wyden (D-OR) on Friday expressed concerns that the federal government shutdown could expose taxpayers to various risks. 

The partial government shutdown has resulted from a standoff between U.S. President Donald Trump and the country’s Democratic Party over the Mexico border wall. The shutdown started on December 22 and it has entered its 24th day.

In a letter (PDF) sent to Secretary of the Treasury Steven T. Mnuchin and Internal Revenue Service (IRS) Commissioner Charles Rettig on Friday, senator Wyden points out that maintaining normal IRS operation during the government shutdown could expose taxpayers to identity theft and financial risks. 

Because of the shutdown, 800,000 federal employees nationally have been on unpaid leave, including an estimated 70,000 at the IRS. As a result, the federal government shutdown is expected to affect the 2019 tax filing season and the IRS’ ability to process tax returns and issue timely refunds.

In his letter, the senator notes that conversations with IRS and Treasury revealed that “the Administration believes they have the legal authority to summon IRS employees back to work without pay,” to address the issue. A revised IRS shutdown contingency plan might be presented within weeks, he notes.

“Is there increased risk of taxpayer ID theft if lRS tries to maintain normal operations during a shutdown?” the senator asks in his letter.

“For example, if IRS is working with a skeleton staff as a result of the shutdown, is there an elevated risk that cyber criminals filing fraudulent returns with stolen taxpayer identities will be able to steal taxpayers’ refunds? Will IRS be able to detect, let alone thwart, these fraudulent attempts?” he continues.

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Other questions senator Wyden raises refer to a possible delay of taxpayers’ refunds, as well as IRS’ ability to hire seasonal employees to timely process tax returns, or to process paper returns and issue tax refunds without a delay for taxpayers without access to electronic filing.

“What about fraudulent tax return preparers who attempt to over-claim tax benefits on behalf of their clients? Or unscrupulous preparers who attempt to charge their clients usurious rates of interest in return for receiving their tax refunds right away? Will the shutdown hurt IRS efforts to police such practices?” he asks. 

He also notes that the shutdown left taxpayers without means to communicate with the IRS, meaning that those who responded to collection and audit notices likely received no notification from the IRS. The shutdown would also require the IRS to adjust deadlines, so that people are not penalized because the IRS isn’t able to process responses. 

At the end of the letter, the senator takes a swing at Trump for the manner in which the entire government shutdown situation was handled so far. 

“However, I would be remiss if I did not point out one obvious fact – that this entire tax filing season fiasco, putting so many millions of American taxpayers at financial risk, could have been avoided had the President kept the government open by simply signing the bipartisan continuing resolution that the Senate passed by voice vote, without a single Senator objecting, at the end of last year,” he concludes. 

Related: TLS Certificates for Many .gov Domains Not Renewed Due to Government Shutdown

Related: New Bill Proposes Prison for Execs Misusing Consumer Data

Written By

Ionut Arghire is an international correspondent for SecurityWeek.

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