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The IRS electronically transmitted 1,500 Economic Stimulus Payments (ESPs) with Social Security numbers to the wrong bank accounts. About 250 of these have been returned by banks. The service is still trying to track the remaining 1,250 erroneously deposited payments.

In another foul up, the first pages of 22,000 ESP calculation notices were mailed out with the correct recipients’ Social Security number printed on them. The second page of the two-page notice contained tax information and truncated Social Security numbers of other taxpayers.

Despite having increased the risk of identity theft for thousands of people, National Taxpayer Advocate Nina Olson described these errors as “minor glitches” in her testimony to Congress last month.

The IRS’s Privacy, Information Protection and Data Security Advisory Committee is still undecided on whether to offer credit monitoring to the 1,500 taxpayers whose checks and Social Security numbers went to wrong accounts.

In the second instance, the committee unanimously decided the errors weren’t serious enough to warrant sending a data loss notification, or to provide credit monitoring to the taxpayers whose information was compromised. Instead, the committee chose to send corrected ESP calculation notices with an apology.

Olson also reported that tax-related identity theft complaints are up 644% since 2004.

“While the IRS is reforming some aspects of its approach to identity theft, its procedures for dealing with victims have been a significant part of the problem,” Olson said.

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This entry was posted on Friday, July 25th, 2008 at 10:53 am and is filed under Data breach. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.