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MSP #6: PREPARER ACCESS TO ONLINE ACCOUNTS

Granting Uncredentialed Preparers Access to an Online Taxpayer Account System Could Create Security Risks and Harm Taxpayers.

TAS Recommendations and IRS Responses

1
1.

TAS RECOMMENDATION #6-1

Limit preparer access to the taxpayer online account system to only those preparers subject to IRS oversight under Circular 230.

IRS RESPONSE TO RECOMMENDATION: NTA Recommendation Not Adopted as Written, but IRS Actions Taken to Address Issues Raised by NTA. A cross-functional IRS team, including members from the TAS, is currently working on analysis and policy planning. As a result of the team’s findings, we will make determinations based on legal requirements, procedural guidelines, and business needs, to improve taxpayer services. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

CORRECTIVE ACTION: A cross-functional IRS team, including members from the TAS, is currently working on analysis and policy planning. As a result of the team’s findings, we will make determinations based on legal requirements, procedural guidelines, and business needs, to improve taxpayer services. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

TAS RESPONSE: The National Taxpayer Advocate is pleased the IRS acknowledges the risks of unregulated preparer access to taxpayer online accounts. We continue to believe that restricting access to the online account to only those subject to oversight under Circular 230 will protect taxpayers from preparer misconduct and incompetence. This protective measure is crucial if the preparers have the ability to self-correct on behalf of the taxpayer. We also encourage the IRS to review the materials submitted and the transcripts for the National Taxpayer Advocate Public Forums in which this important issue is discussed.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

2
2.

TAS RECOMMENDATION #6-2

Develop the online account system so it validates the preparer’s PTIN information. If the preparer is not subject to Circular 230 oversight, the system should block certain authorization checkboxes automatically.

IRS RESPONSE TO RECOMMENDATION: NTA Recommendation Not Adopted as Written, but IRS Actions Taken to Address Issues Raised by NTA. A cross-functional IRS team, including members from the TAS, is currently working on
analysis and policy planning. As a result of the team’s findings, we will make determinations based on legal requirements, procedural guidelines, and business needs, to improve taxpayer services. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

Update: A determination has been made that access for third parties will be worked parallel with Online Account for individuals.  Access for third parties is contingent upon the successful completion of eA3 Solutions that are under development.  Access for third parties will adhere to governing regulations, policy, and law.

CORRECTIVE ACTION: A cross-functional IRS team, including members from the TAS, is currently working on analysis and policy planning. As a result of the team’s findings, we will make determinations based on legal requirements, procedural guidelines, and business needs, to improve taxpayer services. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

TAS RESPONSE: TAS encourages the IRS to consider the consequences of not implementing this important measure. The provisions of Circular 230 and Revenue Procedure 2014-42 restrict the type of practice in which unenrolled preparers can engage before the IRS. Only those unenrolled preparers with records of completion from the voluntary Annual Filing Season Program can represent a taxpayer before the IRS during an examination of a return that is prepared and signed by that preparer. Failure to build these requirements into the system will potentially harm taxpayers and provide a gateway for preparer misconduct.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

3
3.

TAS RECOMMENDATION #6-3

Develop the online account system so that the taxpayer can adjust preparer authorizations by checking a separate box for each type of action the designated preparer can take on the taxpayer’s behalf. The checkboxes should use plain language explanations that Taxpayer Advocacy Panel members and Low Income Taxpayer Clinics have reviewed.

IRS RESPONSE TO RECOMMENDATION: NTA Recommendation Not Adopted as Written, but IRS Actions Taken to Address Issues Raised by NTA. The cross-functional team, including members of the TAS, will work on specific components, capabilities and business requirements which will include the following considerations:

  • The taxpayer may add, change or delete authorizations once authenticated
  • The taxpayer will choose a role to be granted to the third party
  • The taxpayer defined role will determine additional rules that determine specific access allowed

Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

Update: A determination has been made that access for third parties will be worked parallel with Online Account for individuals.  Access for third parties is contingent upon the successful completion of eA3 Solutions that are under development.  Access for third parties will adhere to governing regulations, policy, and law.

Update: W&I is working with IT to develop the Tax Professional Account which includes the ability to submit authorizations online, view, manage (withdraw/revoke) and modify. This capability was included in the IRS Integrated Modernization Business Plan under Phase 1 (FY 2019 – FY 2021). Because authorizations have a technical dependency on electronic signatures, the first capability to be delivered will be the e-Signature capability. Once developed developmental work regarding design and requirements can begin. The final timeline for delivery has not been determined yet, as with all Web Apps products, the first release will be the Minimal Viable Product and each subsequent release will have enhancements and improvements.

CORRECTIVE ACTION: The cross-functional team, including members of the TAS, will work on specific components, capabilities and business requirements which will include the following considerations:

  • The taxpayer may add, change or delete authorizations once authenticated
  • The taxpayer will choose a role to be granted to the third party
  • The taxpayer defined role will determine additional rules that determine specific access allowed

Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

Update: A cross-functional IRS team, including members from the TAS, is currently working on analysis and policy planning. As a result of the team’s findings, we will make determinations based on legal requirements, procedural guidelines, and business needs, to improve taxpayer services. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

TAS RESPONSE: It is unclear why the IRS does not agree with this recommendation, given the principles it has articulated above. TAS encourages the IRS to develop a system in which the taxpayer maintains absolute and detailed control over third party authorizations. Further, the authorization should use plain language explanations so that the taxpayers fully understand what they are authorizing the third party to do on their behalf.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

4
4.

TAS RECOMMENDATION #6-4

Develop procedures to track preparer access to the taxpayer’s online account and verify the taxpayer authorized the actions taken.

IRS RESPONSE TO RECOMMENDATION: NTA Recommendation Not Adopted as Written, but IRS Actions Taken to Address Issues Raised by NTA. The cross-functional team, including members of the TAS, will work on specific components, capabilities and business requirements. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

Update: A determination has been made that access for third parties will be worked parallel with Online Account for individuals. Access for third parties is contingent upon the successful completion of eA3 Solutions that are under development. Access for third parties will adhere to governing regulations, policy, and law.

Update: Per IAO, the Tax Pro Account will use the IT developed Authorization Framework to ensure that duly authorized representatives are granted access rights to a taxpayer’s account based upon the authorization that the taxpayer has granted following the Forms 2848 and 8821 guidelines. At the core of this corrective action is the way in which IT programs the rights that the taxpayer grants his/her representative.

CORRECTIVE ACTION: The cross-functional team, including members of the TAS, will work on specific components, capabilities and business requirements. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

TAS RESPONSE: It is unclear why the IRS does not agree with the basic principles of this recommendation, which should form the basis of any study of the issue. TAS encourages the IRS to develop the system to track and restrict preparer actions based on the taxpayer’s permissions granted. Failure to do so could lead to unauthorized disclosures by the IRS in violation of IRC § 6103 violations.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

5
5.

TAS RECOMMENDATION #6-5

Develop procedures to automatically alert the taxpayer of any preparer activities on the online account system and provide information to the taxpayer on how to report unauthorized access.

IRS RESPONSE TO RECOMMENDATION: NTA Recommendation Not Adopted as Written, but IRS Actions Taken to Address Issues Raised by NTA. The cross-functional team, including members of the TAS, will work on specific components, capabilities and business requirements. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

Update: A determination has been made that access for third parties will be worked parallel with Online Account for individuals. Access for third parties is contingent upon the successful completion of eA3 Solutions that are under development. Access for third parties will adhere to governing regulations, policy, and law.

Update: Per IAO, the taxpayer notification capability would be a business requirement for development within the Tax Pro Account application. This capability would be part of the Web Apps backlog that would be worked based upon business priority, IT capacity, and ranking within the agile development process. This capability could be added to the Tax Pro Account backlog list.

CORRECTIVE ACTION: The cross-functional team, including members of the TAS, will work on specific components, capabilities and business requirements. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

Update: A cross-functional IRS team, including members from the TAS, is currently working on analysis and policy planning. As a result of the team’s findings, we will make determinations based on legal requirements, procedural guidelines, and business needs, to improve taxpayer services. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

TAS RESPONSE: TAS encourages the IRS cross-functional team to review the transcripts and materials submitted for the National Taxpayer Advocate Public Forums in which this topic was discussed. The taxpayers should be informed of all actions take on the taxpayer’s behalf. The method and frequency of delivery could be specified by the taxpayer.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

6
6.

TAS RECOMMENDATION #6-6

Work with the Department of Treasury to issue guidance specifically applying the provisions of IRC §§ 6713 and 7216 to unauthorized access to the online account system. In addition, the IRS should work with Treasury to revise Circular 230 sanctions to include sanctions for preparers who conduct, or attempt to conduct, unauthorized transactions on the online account system.

IRS RESPONSE TO RECOMMENDATION: NTA Recommendation Not Adopted as Written, but IRS Actions Taken to Address Issues Raised by NTA. The cross-functional team, including members of the TAS, will work on specific components, capabilities and business requirements. The IRS recognizes it must protect taxpayer information by ensuring that taxpayers authorize an approved representative, identify the data to be shared with the representative and determine the length of time the representative has access to the data. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

Update: A determination has been made that access for third parties will be worked parallel with Online Account for individuals. Access for third parties is contingent upon the successful completion of eA3 Solutions that are under development. Access for third parties will adhere to governing regulations, policy, and law.

Update: Prior to revising Circular 230, we must ensure access for the online system adheres to governing regulations, policy and law. W&I is working with IT to develop the Tax Professional Account which includes the ability to submit authorizations online, view, manage (withdraw/revoke) and modify. This capability was included in the IRS Integrated Modernization Business Plan under Phase 1 (FY 2019 – FY 2021). Because authorizations have a technical dependency on electronic signatures, the first capability to be delivered will be the e-Signature capability. Once developed developmental work regarding design and requirements can begin. The final timeline for delivery has not been determined yet, as with all Web Apps products, the first release will be the Minimal Viable Product and each subsequent release will have enhancements and improvements.

CORRECTIVE ACTION: The cross-functional team, including members of the TAS, will work on specific components, capabilities and business requirements. The IRS recognizes it must protect taxpayer information by ensuring that taxpayers authorize an approved representative, identify the data to be shared with the representative and determine the length of time the representative has access to the data. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

Update: A cross-functional IRS team, including members from the TAS, is currently working on analysis and policy planning. As a result of the team’s findings, we will make determinations based on legal requirements, procedural guidelines, and business needs, to improve taxpayer services. Upon completion of the study and analysis of findings, the IRS will take this recommendation under consideration.

TAS RESPONSE: TAS appreciates the IRS considering this very important matter, however, it is unclear why the IRS does not agree with general principal stated in this recommendation, which should form the foundation for any review by the cross-functional team. Due to the evolving technology in tax administration since the drafting of both disclosure Code provisions, we believe guidance is a necessary reminder to both internal and external stakeholders of the consequences of using and disclosing taxpayer data accessed through the online account.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

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