The IRS requires that taxpayers supply an array of information regarding their identity, finances, offshore accounts, life circumstances and many other factors that can influence a person’s tax obligations and liabilities. However, to many tax filers, the IRS’s requests for information can seem overboard and far more detailed than the agency needs to ensure the sound administration of the U.S. Tax Code.
In particular, at least some taxpayers are wary about handing over their drivers’ license number, issue date, and expiration date. By and large, concerns regarding releasing this information are concentrated on security and identity theft issues. Some people fear that submitting this information to yet another government database may make identity theft more likely rather than less likely. Unfortunately, the IRS has taken something of a “take it or leave it to approach” when it comes to e-filing one’s taxes.
Why Does the IRS Require This Information When E-filing?
The IRS states that it does not require taxpayers to provide drivers’ license information to file their federal taxes. However, the agency indicates that some states have elected to implement this requirement in an effort to crack down on stolen identity income tax return fraud. The agencies reason that while thieves may have obtained your Social Security number and other information, they may not have obtained your drivers’ license number and related information. Thus, the driver license requirement in place in a few states is largely intended to serve as an extra layer of verification to protect against fraud.
While the IRS’s website states many times that, “You do not need a driver’s license number to file a federal return,” any individual who has attempted to e-file their taxes probably knows that this isn’t quite 100 percent accurate. That is when a taxpayer attempts to e-file his or her federal tax return the IRS web portal will present the taxpayer with two choices:
- To supply his or her drivers’ license information.
- To indicate that he or she has not obtained a drivers’ license or a state identification card.
For individuals who fit neatly into these categories, the decision is easy and straightforward. However, for taxpayers who may have obtained a drivers’ license but do not wish to include it in their tax filing, the current schema used by the IRS doesn’t seem to account for this possibility. Thus, the taxpayer must enter something into this box.
What Happens if You Do Not Have a License or Do Not Wish to Provide it?
Taxpayers who have a drivers’ license or state ID card but do not wish to provide it as part of filing their taxes generally have three options. They can:
- Consent to supply the information contained on their drivers’ license or state ID card.
- Refrain from supplying this information by filing taxes on paper.
- E-file taxes by falsely stating that one does not have a drivers’ license or state Identification card.
The first and second option are certainly viable. In either scenario, the taxpayer would be able to file his or her taxes. However, in the first option the taxpayer does reveal the information that he or she wished to protect and in the second option, the taxpayer is subject to inconvenience. Nevertheless, these options would allow a taxpayer to file without creating additional potential tax issues.
The third option is likely problematic. Individuals who lie about not having a license or similar identification when they know they do are willfully making a false statement to the IRS. Making false or inaccurate representations or statements to the IRS can be viewed as a sign that the taxpayer is likely engaged in some form of tax fraud. This can lead to a tax audit. Furthermore, the filing of a false tax return is a federal crime. While it is somewhat unlikely that this would trigger a criminal tax prosecution for filing a false return, the crime can be punished by a prison sentence of up to three years and $250,000 in fines. Generally, it is wise to avoid making false statements and taxpayers should consider any inconvenience experienced as an investment in maintaining their tax compliance.
Questions about Your U.S. Expat Taxes and In Need of an Experienced CPA?
If you have questions or concerns about your approach to U.S. expat taxes, what income you need to report, actions you should take regarding offshore accounts, and any other tax anxieties CPA Ted Kleinman can help. For more than 20 years, Ted has helped people satisfy their tax obligations. To schedule a free consultation, call 1-800-810-9312 today