Friday, August 15, 2014

IRS Admits it has Been Disclosing Sensitive Taxpayer Information without Adequate Controls

The Treasury Inspector General for Tax Administration (TIGTA) found that some IRS contractor personnel without the appropriate background investigation had access to taxpayer and other sensitive but unclassified (SBU) information. TIGTA found that taxpayer data and other SBU information may be at risk due to a lack of background investigation requirements in five contracts for courier, printing, document recovery and sign language interpreter services. TIGTA found 12 more service contracts for which employee background checks were required by the contracts; however, some of the personnel did not have interim access approval or final background investigations before they began working on the contracts.

TIGTA made five recommendations to the IRS to ensure that the service contracts have security provisions included in the solicitation and contract, and that associated contractor personnel have appropriate interim access approval or final background investigation before working on the contract. In addition, TIGTA recommended that the IRS use the results of the contract reviews to train program office and procurement office staff on contractor security requirements and the necessity for contractor personnel to sign nondisclosure agreements prior to working on a contract. TIGTA also recommended that the Office of Chief Counsel work with the Department of Treasury Security Office to review the waiver currently in place that exempts expert witnesses from background investigations and to determine if the waiver is still appropriate given the current security environment.

The IRS agreed with four or the five recommendations. It disagreed with the recommendation that Chief Counsel work with the Department of Treasury with respect to the waiver that exempts expert witnesses from background investigations as it believes its current review is sufficient to address any security risks. I suppose if this was a baseball game the IRS's correction rate would .800. Unfortunately, the game here involves failure to protect taxpayer information. Thank goodness for TIGTA.

Contact the Wilson Tax Law Group if you believe your taxpayer data has been breached. 714-463-4430

Tuesday, August 12, 2014

California—Property Tax: Solar Energy System Exclusion Extended

In California there are basically two ways that your property taxes can be reassessed at full market value. One is when you sell or purchase the real property. The second is if you have new construction or have a major addition to the real property. There are numerous tax incentives both in California and at the Federal level to promote green energy. One such incentive includes the California property tax rules which were amended to provide an exclusion from classification as newly constructed for the construction or addition of an active solar energy system. Thus, if you install a solar energy system on your rooftop that will not cause your property taxes to increases because of new construction. The exclusion however was set to expire in 2015-16. The good news is that the exclusion has been extended and now applies to property tax lien dates through 2023-24 fiscal year. Under the new amendments the exclusion is repealed January 1, 2025 (formerly 2017). Therefore, active solar energy systems that qualify for the exclusion prior to January 1, 2025 (formerly, 2017) will continue to be excluded on and after that date until there is a subsequent change in ownership. See S.B. 871, Laws 2014, effective June 20, 2014. This is great news for anyone interested in installing a solar energy system because your property tax base will not be reassessed at fair market value and it will continue to increase at no more than 2 percent per year under Proposition 13. That is as long as Proposition 13 does not get repealed or amended.

If you are an owner of real estate or solar energy provider in California and have questions about property taxes or other types of solar tax incentives, please contact the Wilson Tax Law Group. We can be reached 714-463-4430.