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Washington D.C.
Saturday, January 28, 2023

IRS to Strengthen Taxpayer Authentication Efforts

IRS authenticates millions of taxpayers each year via telephone, online, in person, and correspondence to ensure that it is interacting with legitimate taxpayers. To authenticate the millions who work with the IRS, the costs range and vary by each channel. Telephone services, which authenticate around seven million users each year, cost from 60 cents per interaction to $54. In comparison, the online services only came to around 20cents per interaction, authenticating a whopping 16 million taxpayers.

IRS has made progress on monitoring and improving authentication, including developing an authentication strategy with high-level strategic efforts. However, it has not prioritized the initiatives supporting its strategy nor identified the resources required to complete them, consistent with program management leading practices. Doing so would help IRS clarify relationships between its authentication efforts and articulate resource needs relative to expected benefits. Further, while IRS regularly assesses risks to and monitors its online authentication applications, it has not established equally rigorous internal controls for its telephone, in-person, and correspondence channels, including mechanisms to collect reliable, useful data to monitor authentication outcomes. As a result, IRS may not identify current or emerging threats to the tax system.

A GAO report found that as a result, IRS may not be positioned to address its most vulnerable authentication areas in a timely manner. IRS lacks a comprehensive process to evaluate potential new authentication technologies. Industry representatives, financial institutions, and government officials told GAO that the best authentication approach relies on multiple strategies and sources of information, while giving taxpayers options for actively protecting their identity. Evaluating alternatives for taxpayer authentication will help IRS avoid missing opportunities for improving authentication.

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