The IRS is talking about making taxpayer information available online. I am terrified.
According to the Don't Mess With Taxes blog, the director of the agency's Office of Electronic Tax Administration, David R. Williams, says that up to three years of returns may be made available to taxpayers as soon as next summer. This is the Service's attempt to be customer-friendly in a 21st century sort of way. And, to some, it may seem like a great convenience. But….
One problem is that the plan would be of only limited use. Eventually, a taxpayer might be able to change an address or request an extension on line. But the agency has no plans to let you actually file a return this way. You would still have to pay a third-party vendor for the dubious privilege of e-filing.
What really gives me the willies, however, is the security problem. Williams says that this is the agency's top priority, as it should be. But given the IRS' dismal technology track record, I can't help but wonder if it can really keep our data safe.
I can imagine that either the system will be hacked and our most sensitive personal information peddled to identity thieves (or spread all over the Web), or the security protocols will be so cumbersome that online access will be unusable.
We all have seen the trouble that large institutions have had with securing their data bases. As far as we know, the IRS has done a good job of protecting taxpayer information with the data it keeps in-house. But by making taxpayer information available online, it will suddenly open nearly 150 million access points to its—or rather our—data.
At least for now, the cost-benefit analysis seems pretty clear. Until we can actually file directly online, the benefits are insignificant. By contrast, the potential privacy cost is huge.
Until the IRS convinces me that my tax returns will be safe from three guys and a laptop in Kiev, I'd much rather the agency spend its limited technology dollars getting its internal data systems right. I can change my address on paper, thank you.
