IRS Warns Nonprofits Not to Disclose SSNs

The Internal Revenue Service has issued a reminder to tax-exempt organizations not to include Social Security Numbers on publicly disclosed forms.

In an email to exempt organizations Thursday, the IRS wrote, “Because the IRS is required to disclose approved exemption applications and information returns, exempt organizations shouldn’t include personal information, such as Social Security numbers, on these forms. By law, with limited exceptions, the IRS has no authority to remove that information before making the forms publicly available.”

A recent study found that the Form 990 tax returns filed by tax-exempt organizations frequently expose the Social Security numbers of tax preparers, donors, employees, scholarship recipients and others to the public (see Study Finds Charities’ Tax Returns Expose Social Security Numbers).

The study by Identity Finder LLC used the company’s Identity Finder DLP 6.0 software to search through 2,892,475 Form 990s from tax years 2001 through 2006 for personally identifiable information such as Social Security numbers. It found that 132,362 organizations published 472,866 SSNs, of which 171,005 were unique.

The IRS has been trying to step up its fight against the growing problem of taxpayer identity theft this year (see IRS Prodded to Cut Identity Theft and Tax Gap). At a congressional hearing Thursday, Treasury Inspector General for Tax Administration J. Russell George testified that as of March 7, 2012, the IRS had identified 128,242 tax returns involving identity theft with $793 million in associated fraudulent tax refunds.