As the federal government continues to implement Obamacare, the IRS is the next federal agency to handle the personal financial and family information of participants. According to the Treasury Department’s inspector general, that data might not be safe.
J. Russell George told Senators he “remains concerned about the protection of confidential taxpayer data.” In addition, he believes the IRS does not have adequate systems in place to prevent people from fraudulently claiming health care tax credits to reduce their tax burden in 2014 tax returns.
Approximately 21 federal agencies are involved in various aspects of Obamacare. That’s a lot of people and systems potentially accessing your family’s Social Security numbers, household and adjusted gross income, family size, filing status, and health information. State-run exchanges also handle the same personal information.
We’ve already seen how well the government safeguards Obamacare-related data. Last fall, the Department of Health and Human Services (HHS) launched Healthcare.gov, the federal exchange, amidst reassurances of strong data security. Instead, the site has been called a “security nightmare,” and security specialists said it should have been called “Identitytheft.gov.” There were documented breaches in security and personal information, including those reported by The Foundry.
Those breaches occurred at an agency that claimed to be secure.
The IRS’s role in implementing Obamacare is to verify and process the premium tax credits being claimed by individuals and families that help pay for their coverage. Communications between the IRS via the HHS “data hub” with the state or federal exchanges go back and forth; the IRS must verify the identity of those claiming tax credits (Social Security number), their earnings, and family status.
As if worrying about security breaches isn’t bad enough, George is also “concerned that the IRS’s existing fraud detection system may not be capable of identifying Affordable Care Act refund fraud or schemes prior to the issuance of tax refunds.”
With predictions of 6 million claiming health care tax credits in 2014 worth $16 billion, people claiming credits they don’t deserve should be a worry. New IRS commissioner John Koskinen noted that another widely claimed credit, the Earned Income Tax Credit, has an “improper payment rate [that] has remained unacceptably high throughout the program’s history.”
IRS officials say they are working on systems to deal with security and fraud, but they need more money from Congress. Last week’s revelations that the IRS awarded $2.8 million in bonuses to 2,800 employees with “substantiated” conduct problems—including those who have not paid their own income taxes—may make the request for more funding a harder sell.