According to the Federal Trade Commission’s 2021 Data Book, the Consumer Sentinel Network received over 4.7 million consumer reports focusing on fraud, identity theft, and other consumer protection topics in 2020, an increase from the prior year. Of those, nearly 3 in 10 reports—more than any other type of complaint—were on identity theft.
It’s an issue that the IRS and its partners take seriously: Identity theft for tax purposes is so popular that it is regularly named one of the IRS’s Dirty Dozen Tax Scams.
The IRS has taken several steps to combat ID theft, including issuing Identity Protection PINs, limiting the number of tax refunds going to financial accounts or addresses, and masking personal information from tax transcripts.
But the IRS’s latest effort to combat ID theft is causing controversy: Selfies.
No, the IRS isn’t requiring you to log on to Instagram—though it does have an account—it is using new technology focused on photo identification for verification.
Here’s what has folks talking. When you navigate to irs.gov to access your account online, you normally go to a screen where you log on with your IRS user name. But this tax season, taxpayers—like me—noticed that the sign-in screen looked a little different. In addition to the option to “sign in with an existing IRS username,” you could create or sign in with ID.me.
According to the IRS instructions, “If you have an existing IRS username, please create a new ID.me account as soon as possible.”
The page further notes, “You won’t be able to log in with your existing IRS username and password starting in summer 2022.”
At the same time, the IRS identifies ID.me as their “trusted technology provider in helping to keep your personal information safe.”
ID.me describes itself as a “secure digital identity network” that provides identity proofing, authentication, and group affiliation verification. The company says it works with 27 states, major retailers, and federal agencies—including the IRS. Over 145,000 new users sign up daily, joining its 64 million member-base, ID.me says.
To verify your identity with ID.me for IRS purposes, you’ll need to provide your first and last name, email address, Social Security number, and certain photo ID, including driver’s license, passport, passport card, or state ID.
And here’s what’s causing alarm: The IRS adds that “You’ll also need to take a selfie with a smartphone or a computer with a webcam.”
It’s important to understand that you do not need to register with ID.me or submit a selfie to file your taxes.
But it does mean that you will not be able to access many online services like viewing your balance, creating a payment plan, and accessing your tax records—like your tax transcripts. If you don’t want to use the online services, the options for getting your transcript by mail or by phone are still available, although they take longer.
In a Twitter thread, the ACLU called the move “deeply troubling for a number of reasons.”
Specifically, the organization explained, “Facial recognition technology has been shown to be less accurate for people of color, and requiring people to use http://ID.me raises numerous privacy concerns and adds yet another barrier for people on the wrong side of the digital divide.”
However, ID.me claims its face match system is not the same as facial recognition. According to ID.me’s CEO and founder Blake Hall, “Our 1:1 Face Match is comparable to taking a selfie to unlock a smartphone. ID.me does not use 1:Many Facial Recognition, which is more complex and problematic.”
The company claims that their technology has been tested and found no statistically significant difference in the propensity to pass or fail the Face Match step across demographic groups, including groups with different skin tones.
Another worry focuses on the use of the data, and whether the company might sell personal information. According to Hall, “privacy is core to our mission and we do not sell the personal information of our users.”
Three Ways to Verify Your Identity
There are a few ways to prove who you are. Hall says, “We remain the only digital identity verification service certified against the National Institute of Standards and Technology (NIST) guidelines to offer three ways to verify your identity, including automated self-serve, live video chat, and in-person processes.”
According to ID.me, 90% of individuals who verify their identity with ID.me do so successfully with the self-serve option in less than five minutes.
For the 10% that need additional assistance, ID.me provides a video chat feature. With the chat feature, users schedule a free live video chat with a trained ID.me agent called a “Trusted Referee.” Before the call, users must upload identification documents—from a more extensive list than those in the self-serve option—and confirm their personal information. The Trusted Referee then confirms the authenticity of the user’s documents and application during the chat. The feature is available in 16 different languages.
ID.me says it is the “only company to offer a video chat verification pathway for individuals who don’t have credit, live overseas, are listed inaccurately in records, and/or have technical difficulties and require assistance.”
Those who need in-person verification also have an option. Users can go to a retail location and prove their identity at a kiosk using government documents.
And once verified, users do not have to re-verify their identity across any organization where ID.me is used. That means not only with the IRS but the Social Security Administration, Department of Veterans Affairs, the USPTO, and various state agencies.
Assuming the alternative options for verification work, they don’t alleviate all taxpayer concerns. Logging onto online accounts can be challenging for some populations, including seniors and those with disabilities. Adding a layer of complexity may just ensure that some taxpayers, including those who may need to use online services the most because of problems using the phone or leaving the house, don’t take advantage.
For its part, the IRS has been relatively quiet about the move. In November, the agency announced it “encourages taxpayers to create a new account by using one of the tools listed below.” At the time, the IRS noted that it would transition to the new sign-in system in the summer of 2022 for tax professionals but did not suggest a timeline for individual taxpayers.
And the most recent press release highlighting changes for the tax season merely advises taxpayers to “use IRS.gov to get answers to tax questions, check a refund status or pay taxes.”
Exactly how the IRS will educate taxpayers about the new system is not yet certain, but I expect to see some kind of public relations campaign to alleviate a lot of these concerns.
What Comes Next
Make no mistake: This is a significant change, and the process will worry many taxpayers. Well-placed concerns about data integrity, privacy, and accessibility will need to be addressed, and it will be up to ID.me and the IRS to make taxpayers comfortable that the system works as promised.
Remember, it’s only relatively recently that the IRS has upped their technology game to include comprehensive online services and multi-factor authentication. I think we all assumed that the IRS would tiptoe towards more technology—and all of a sudden, it’s a sprint.
This is a weekly column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest in tax news, tax law, and tax policy. Look for Erb’s column every week from Bloomberg Tax and follow her on Twitter at @taxgirl.
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