As tax season approaches, a recent flush of tax refund fraud has taken center stage. Senator Bill Nelson of Florida began a hearing on a bill to stop the fraud and speed up payments back to victims, yesterday. He proposed this legislation about a year ago.
Like most legislation, this one sounds great. It’s obviously designed to help people and combat a serious problem. There is one issue: the “how” of this bill. How would this legislation stop fraud?
By sharing more of your personal tax information with the police. This should immediately raise the privacy red flag. In Nelson’s bill, he proposes more information sharing between the IRS and local law enforcement. Despite making this information highly sensitive, further sharing always puts information at risk to be leaked. Reuters wrote that the IRS’s national taxpayer advocate, Nina Olson supported the bill but would need very clear parameters on when and how personal information was shared.
Right now, Nelson is advocating a sample program to roll out in Tampa. There is no date on this yet.
Personally, I feel jumping straight to sharing personal information is a problem. The government is pushing hard on privacy measures for the internet yet they want to let our most personal information, our finances, into a place of weakness. (Why not, I guess? They’ve already done that with our medical records.)
I’m not questioning the legitimacy of the problem, especially for Florida. Tax fraud and identity theft can be crippling. But this is not the only solution. Most of the fault lies at the with the IRS. The length of time it takes to process returns alone contributes to the problem. Yet, somehow process of checking for fraud somehow slips by. Third party debit cards unattached to real bank accounts are also an issue. Evaluating how and why fraud happens, then taking steps to correct it seems like the first line of defense before invading personal privacy.