CYA at IRS

On account of the Internal Revenue Code's complexity, the tax return preparer is now a key link in the tax compliance process.  Help with completing the income tax return is regularly enlisted not only by the ordinary citizen, but by some IRS supervisors and at least one commissioner of internal revenue.

Stolen identity tax fraud is a very vexing problem for the IRS and the public fisc, and, as noted previously at congressional hearings and by this author on these pages, tax return preparers can wreak significant damage when they use stolen identities to defraud the system for their own personal gain.  Identity theft committed by bad apples in the tax return preparer community remains a problem.

Kevin Hatton is certainly no slouch.  He has achieved much during his 23 years with the Internal Revenue Service and is now the director of the IRS's E-file Provider Program management office.  In a direct and concrete way, he facilitates the filing of millions of Americans' tax returns in his office's interface with thousands of tax return preparers.

On 10 June 2014, Kevin Hatton was advised by the IRS Office of Chief Counsel, in response to his query that the IRS in general and, implicitly, Hatton's office in particular, is indeed authorized "to adopt rules that deny an IRS e-file Provider application or expel an individual from participation in IRS e-file when a stolen identity is used to apply for an electronic filing identification number (EFIN), or when an IRS e-file Provider is using stolen identities to e-file fraudulent returns."  The memorandum was published in redacted form on 27 January 2015 by Tax Analysts, which obtained the memorandum from the IRS pursuant to the Freedom of Information Act.  (The Tax Analysts reference is 2015 TNT 17-17 (Doc 2015-1821); I shall honor the Tax Analysts copyright, both on general principles and also in light of the fact that they have carried my own writings in their publications.)

After so much ado all these years regarding stolen identity tax fraud, there should be no question of the IRS's need to pounce upon the obvious identity thieves.  The fact that Kevin Hatton found it necessary to obtain Chief Counsel's blessing for what should implicitly be a basic permissible function of his office says no less about the IRS's dysfunctional internal organizational culture than it does about Hatton's appreciation of the grave problem his office now confronts.

Kenneth H. Ryesky is a lawyer who teaches business law and taxation at Queens College CUNY.  He formerly served as an attorney for the IRS.

On account of the Internal Revenue Code's complexity, the tax return preparer is now a key link in the tax compliance process.  Help with completing the income tax return is regularly enlisted not only by the ordinary citizen, but by some IRS supervisors and at least one commissioner of internal revenue.

Stolen identity tax fraud is a very vexing problem for the IRS and the public fisc, and, as noted previously at congressional hearings and by this author on these pages, tax return preparers can wreak significant damage when they use stolen identities to defraud the system for their own personal gain.  Identity theft committed by bad apples in the tax return preparer community remains a problem.

Kevin Hatton is certainly no slouch.  He has achieved much during his 23 years with the Internal Revenue Service and is now the director of the IRS's E-file Provider Program management office.  In a direct and concrete way, he facilitates the filing of millions of Americans' tax returns in his office's interface with thousands of tax return preparers.

On 10 June 2014, Kevin Hatton was advised by the IRS Office of Chief Counsel, in response to his query that the IRS in general and, implicitly, Hatton's office in particular, is indeed authorized "to adopt rules that deny an IRS e-file Provider application or expel an individual from participation in IRS e-file when a stolen identity is used to apply for an electronic filing identification number (EFIN), or when an IRS e-file Provider is using stolen identities to e-file fraudulent returns."  The memorandum was published in redacted form on 27 January 2015 by Tax Analysts, which obtained the memorandum from the IRS pursuant to the Freedom of Information Act.  (The Tax Analysts reference is 2015 TNT 17-17 (Doc 2015-1821); I shall honor the Tax Analysts copyright, both on general principles and also in light of the fact that they have carried my own writings in their publications.)

After so much ado all these years regarding stolen identity tax fraud, there should be no question of the IRS's need to pounce upon the obvious identity thieves.  The fact that Kevin Hatton found it necessary to obtain Chief Counsel's blessing for what should implicitly be a basic permissible function of his office says no less about the IRS's dysfunctional internal organizational culture than it does about Hatton's appreciation of the grave problem his office now confronts.

Kenneth H. Ryesky is a lawyer who teaches business law and taxation at Queens College CUNY.  He formerly served as an attorney for the IRS.