New tax filing security protocols

New Security Step – IR-2016-124 (9/22/16) – The IRS alerted people filing an extended return electronically for 2015 (due 10/17/16), that they likely would be asked to enter their AGI for 2014. The purpose is to help properly identify the taxpayer. The information release reminds people how to order a tax transcript from the IRS should they not have it.

Some states are using a similar system where they might ask for a driver’s license number or other identifying data that a thief might not have (although a thief might easily get someone’s driver’s license, such as because it is on their checks and cancelled checks were thrown out in the trash).

The Alabama Department of Revenue has a few programs to improve security and reduce identity theft. For example, taxpayers may register for a service where they are notified if a return is filed with their Social Security Number. The DOR also has a protection program that begins with the “ID confirmation quiz.” The state also highlights its programs in the Form 40 instruction booklet (although few people likely read this).

What more do you think the IRS and state tax agencies should do to protect the very sensitive information they have?

Alabama Simplifies Compliance with Technology

Alabama enacted SB 459, to create "ONE SPOT: Optional Network Election for Single Point Online Transactions."  Per Governor Bentley who signed the bill on May 3: "Senate Bill 459 will greatly reduce the administrative burden of filing separate returns.  SB 459, sponsored by Senator Slade Blackwell, establishes a single-point electronic filing system through which businesses can file all sales, use, and rental/lease tax returns and make the associated payments." 

Per the Alabama Retail Association, SB 459: "Allows businesses statewide to handle up to three taxes (sales, use, lease/rental) to three different types of governments (city, county and state) with:

• ONE return and
• ONE payment in
• ONE place"

ARA also states that SB 459 "ends one of Alabama businesses’ biggest administrative nightmares. Currently, there are retailers in the state that have to file up to 150 returns and make up to 150 payments to up to 150 different entities EVERY month."

Well, it is unfortunate that something could not have been done earlier to streamline the system, but it is good that the technology helps and the state is looking for and implementing ways to improve compliance and likely reduce costs for businesses.

What do you think?