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IRSSteps must be taken to curb business ID theft, the Information Reporting Program Advisory Committee said this week in its annual report. In a letter to John Koskinen, commissioner of the Internal Revenue Service the committee said cutbacks in funding for the Internal Revenue Service had harmed the effort to halt business ID theft as the IRS put its emphasis on the same issue for individual taxpayers.

While the efforts in the consumer are necessary "resources are also
needed to implement changes within the IRS that will protect against business
identity theft including its devastating effects on small businesses," IRPAC chair
Mary Kallewaard wrote in formally presenting the report to the commissioner.

In addition, committee said more funding is needed to bring IRS technology systems into the Twenty-first Century, convert manual processes to electronic, and provide a more efficient, safe, trackable and timely means of community with taxpayers.

Citing a third area impacted by funding cuts, the committee also said the IRS needs to have the resources to provide guidance when new regulations run into real-world issues.

In terms of business identity theft, the committee said theft can seriously harm small businesses and prevent them from obtaining credit or expanding. IRPAC recommended permitting truncation of the payor/issuer's EIN on recipient copies of information returns. It says truncation will allow companies that issue 1099s and other information returns to reduce the opportunity for false information returns being filed via their EIN and legal name.

The committee said both EINs should be allowed to be truncated on
new Form 1095-B which displays the EIN of the insurer and an employer EIN, IRPAC recommends permitting truncation of both EINs. It also asked the IRS to revise Revenue Procedure 2010-16 to state an address changed related to an EIN will only be made once the agency has received IRS Form 8822-B (Change of Address – Business) while steps should be taken to prevent the address in the Business Master File from being overwritten when a tax return is filed that is not normally filed by the business

In addition, the committee recommended flagging a business, which has reported it has closed or stopped paying wages, when its Form 941box on Line 15 of part 3, has been checked. Instead of providing one box, the IRS should offer two, one for instances in which a business has closed and the other when it has stopped paying wages. The will enable the IRS to close EFINs for such organization.

Last modified on Thursday, 29 October 2015
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