by Brian Mahany
The genesis of this article comes from a Bloomberg piece written in the San Francisco Chronicle. According to published reports, a Jackson Hewitt franchise location left hundreds of old returns in a box outside. Police were ultimately called after the returns were left outside overnight on a busy street.
The returns contained social security numbers, W-2’s, phone numbers and home addresses – an identity thief’s paradise.
Why were the items left outside? The Jackson Hewitt franchise on Divisadero Street in San Francisco had been evicted for nonpayment of rent. Ultimately the landlord put items remaining in the abandoned office on the street. That’s when a passerby noticed that hundreds of tax returns were simply left open and exposed on the busy street.
The former tenant apparently claimed that he really wasn’t responsible because the records were “too heavy.” He claims to have edited them before leaving them behind. He believes that they were properly disposed of but does admit “feeling bad” that they were left outside.
Jackson Hewitt claims that it will investigate. It too, however, seems to be dodging responsibility. Most of its prepared statement emphasizes how security and data protection are the responsibility of the franchise.
Not mentioned in the article are the penalties that apply to breaching IRS disclosure (confidentiality) rules, often $1000 per taxpayer’s return. Leaving returns outside certainly qualifies as a breach. If witness claims are correct that hundreds of returns were left on the street, the fines could be staggering. In addition, the company and the franchise owner could potentially be financially liable if anyone’s identity was taken.
We are great fans of using CPA’s and enrolled agents for tax preparation. While franchise tax operations like Liberty, H.R. Block and Jackson Hewitt may save you a few bucks, the quality and sophistication is not the same in our opinion and often varies significantly from office to office. Most troubling is Jackson Hewitt’s response to the serious data breach. If accurate, the company needs a thorough data protection and security review by the IRS.
About the author. Brian Mahany is former state revenue commissioner of Maine and a former assistant attorney general tax. He is now an attorney in private practice concentrating in a wide variety of tax matters including offers in compromise, audit defense, criminal tax (tax evasion) and offshore tax issues. For a no obligation consultation, contact Brian directly at (414) 704-6731 or by email at .
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin and satellites in Detroit, Michigan and Portland, Maine. Tax services available anywhere in the U.S.