Improved Procedures Are Needed to Prevent the Fraudulent Use of Third‑Party Authorization Forms to Obtain Taxpayer Information

The Commissioner, Wage and Investment Division, should develop a program to send confirmation letters to taxpayers to confirm submissions prior to authorizing third-party access to their tax information. This confirmation letter program should be implemented until the Third-Party Authorization Tool is deployed and, after deployment, to taxpayers who continue to mail or fax authorization requests to the IRS.

The Commissioner, Wage and Investment Division, should revoke the 194 remaining authorizations in the CAF for which taxpayers responded to the IRS's initial survey letter stating that they did not authorize the representative or designee in the letter to access their tax account, and notify the taxpayers of this action.

The Director, Privacy, Governmental Liaison, and Disclosure, should develop a process to ensure that all TINs associated with confirmed fraudulent CAF authorizations are forwarded to the Return Integrity and Compliance Services.

The Commissioner, Wage and Investment Division, should develop procedures for all functions involved with investigating and responding to fraudulent authorization requests and stolen CAF numbers to timely share their findings and report them to CAF management. The procedures should provide steps for IRS functions to share compromised CAF numbers throughout the IRS.

The Commissioner, Wage and Investment Division, should either remove the refund indicator from all 72,095 authorizations that were processed prior to January 2013 or update refund issuance programming to ignore all refund indicators on the CAF file.