FCRA Policy
Last updated: January 17, 2024
Introduction
The federal Fair Credit Reporting Act (FCRA) and subsequent laws and regulations promote the accuracy, fairness, and privacy of information in the files of consumer reporting agencies (see definition below). As a third party that provides information from the Internal Revenue Service to its clients (on behalf of their clients), TaxStatus complies with all requirements of the Fair Credit Reporting Act that apply to its activities. As designated by the Fair Credit Reporting Act, both the Federal Trade Commission (FTC) and the Consumer Financial Protection Board have responsibility for overseeing and enforcing the provisions of the Act.
For the purposes of this and related policies, TaxStatus will refer to its clients (frequently credit reporting agencies themselves) as “clients,” to the clients of its clients (frequently banks) as “users” (as the CFPB refers to them) and the data subjects (applicants for loans or jobs) as “consumers” (as the FCRA and the Federal Trade Commission refer to them).
Statement of Policy
The Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) and its implementing regulation (12 C.F.R. § 1022 et seq.) defines a “consumer reporting agency” as: “1. Any person, which for monetary fees, dues, or on a cooperative nonprofit basis, 2. Regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers 3. For the purpose of furnishing consumer reports to third parties, and 4. Which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.”
And the FCRA defines a “consumer report” as “any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of servicing as a factor in establishing the consumer’s eligibility for (A) credit or insurance to be used primarily for personal, family, or household purposes; (B) employment purposes; or (C) any other purpose authorized under section 1681b of this title.”
TaxStatus automates the collection and authorized disclosure of specific taxpayer’s IRS account information on a per request basis. TaxStatus provides reports containing only Federal Tax Information from the IRS to the clients (lenders and employers, referred to as “users” by the FPCB) of its clients (frequently other Credit Reporting Agencies) about the IRS compliance, collection, and audit history of individual Data Subjects (referred to as “consumers” by the FCRA). The TaxStatus Chief Information Security Officer, and designated senior managers have responsibility for overseeing the policies and procedures of TaxStatus to ensure compliance with the Fair Credit Reporting Act and other relevant federal and state laws and regulations.
TaxStatus cares deeply about securing the privacy and confidentiality of individual taxpayer’s personal tax information and adheres to the following policies and procedures to protect the taxpayer (consumers) and provide them with full transparency with regard to their IRS account information.
Policies and Procedures
1 TaxStatus’ Fair Credit Reporting Act Compliance Policies and Procedures
TaxStatus has developed and disseminates to all executives, managers, and workforce members: A policy that addresses purpose, scope, responsibilities, management commitment, coordination among organizational entities, and compliance; and procedures to facilitate compliance with the Fair Credit Reporting Act (FCRA) and the implementation of associated controls.
TaxStatus reviews and updates the current FCRA compliance policy and procedures annually or whenever required by any significant changes in the organization’s information technology environment, the range of products and services being offered to clients, or the compliance environment.
2 Obligations Under the Requirements of the Fair Credit Reporting Act
Under the Fair Credit Reporting Act, consumer reporting agencies have four main responsibilities, and must:
- Take reasonable steps to ensure the user of each report has a “permissible purpose” to use the report (see policy “3 Permissible Purposes and Uses of Reports” below for additional information);
- Take reasonable steps to ensure the maximum possible accuracy of the information conveyed in its reports (see policy “4 Ensuring Maximum Possible Accuracy” below for additional information);
- Provide a mechanism for processing and re-investigating credit disputes received from consumers (see policy “10 Processing and Re-investigating Credit Disputes” below for additional information); and
- Provide clients and users with information about their obligations under the FCRA and consumers about their rights under FCRA (see policies “2.3 and 2.4 as well as the “Summary of Your Rights” below for additional information).
Many states and local governments have their own consumer reporting laws and regulations, which may be identified by contacting state or local consumer protection agencies or state Attorneys General.
Utilizing its network of licensed tax professionals, TaxStatus uses a secure and proprietary application to automate client requests for taxpayer account records and creates a report summarizing the finding which may contain information regarding compliance, collection, and audit history of a particular subject. This would make TaxStatus a “consumer reporting agency” under the requirements of the FCRA and its implementing regulations.
2.1 Obtaining Permission Under the Requirements of the FCRA
Under contract to its direct clients, through its client’s client (the user), TaxStatus obtains permission from the Data Subject (the taxpayer) to access that individual’s Federal Tax Information (FTI) directly from the IRS by obtaining signed agreements from the Data Subject using IRS forms 2848 (“Power of Attorney and Declaration of Representative”) and 8824 (“Tax Information Authorization”). The consent forms are valid until the expiration date (three years in the future by default) until the consumer revokes consent through the TaxStatus secure web portal or by filing a second set of 8821/2848 forms with the word “REVOKE” written on it.
TaxStatus obtains an additional “Consent to Use of IRS Current and Historical Information” and a “Consent Disclosure of Current and Historical Tax Return Information” agreement from the Data Subject that then allows TaxStatus to gather that individual’s data to assemble a report (using the equivalent functions of copying and pasting) that contains that Data Subject’s FTI with a simple summary showing balances due (if any). Although by its collecting and assembling data, TaxStatus would likely be considered a “consumer reporting agency” that generates “consumer reports” under the FCRA, TaxStatus performs no evaluation of the raw data and simply serves as a conduit from the IRS to the client’s client.
2.2 Privacy Rights
Consumers may prevent the disclosure of any information by denying or revoking access on a per request basis and can make these changes anytime by managing their consent settings on their secure web portal.
2.3 Notification of Clients of Their Obligations Under FCRA
Clients of TaxStatus are required to sign an acknowledgement of their obligations under FCRA in each client contract or agreement.
2.4 Notification of Consumers of Their Rights Under FCRA
A Notice informing consumers of their rights under FCRA is available on the TaxStatus secure web portal, as well as from the Federal Trade Commission and the Consumer Financial Protection Board. (See https://www.taxstatus.com/fcra).
3 Permissible Purposes and Uses of Reports
Under its contractual obligations with its clients, TaxStatus and its clients have agreed to limit the use of its applications and information systems to those purposes and uses that are considered “permissible” by the Fair Credit Reporting Act and any other relevant federal and state laws, rules and regulations.
Permissible uses require being the result of being initiated by an application from a consumer or by instructions by the consumer in writing. The client of TaxStatus’ client is required to certify that the report is being obtained for a permissible use and that it will not be used for any other purpose. Consumers will dictate, through their explicit consent through the use of the above referenced forms, which client(s) of TaxStatus are permitted to use their tax information and for what purpose.
Those purposes are generally limited to uses:
- For the extension of credit or a review or collection of a consumer’s account;
- For employment purposes, including those involving hiring and promotion decisions;
- For the underwriting of insurance;
- For debt collection;
- When there is a legitimate business need in connection with a business transaction that the consumer has initiated;
- To review a Consumer’s Account to determine whether the consumer continues to meet the terms of an account; or
- By a potential investor, servicer, or current insurer, in a valuation or assessment of credit or repayment risks.
4 Ensuring Maximum Accuracy of Reports
The TaxStatus system pulls Federal Tax Information in Internal Revenue Service account records directly from the IRS upon each request, ensuring that only the most current information is presented. The IRS transcripts are passed-through unaltered directly from the IRS. TaxStatus will, however, notify the client if it is notified or becomes aware that the information from the IRS is inaccurate or incomplete.
5 Client Identification & Authentication / Access Control
TaxStatus has developed and implemented identification and authentication, and access control policies and procedures for registering, credentialing and on-boarding new clients by determining the legitimacy of their authority to receive Federal Tax Information about the data subjects (consumers) from the IRS via the TaxStatus application. Clients receive only that FTI and those reports to which individual consumers have provided consent through a particular client.
5.1 Certification of Purpose
Each client contracts with TaxStatus under specific use-cases for permissible purposes. Each client contract requires disclosure of what data is requested and how it is intended to be used. These stipulations provide the basis for the consumer consent language.
5.2 Reasonable Belief as to Use for Impermissible Purpose
The permissible uses are specified in each contract that client has with TaxStatus. Other uses will not be permitted, should TaxStatus believe the client intends to use the data for impermissible purposes, which would involve a purpose that has not been fully disclosed to the consumer.
5.3 Client Registration and On-boarding Process
Evidence of client’s intended use is required during new client onboarding and is identified during the contract due diligence process.
5.4 Credentialing Initiatives for New Clients
Only after new client onboarding and contract due diligence will clients be granted secure and unique credentials for their access to the system.
5.5 Client Access Limited to Specific Information
The only information available to the client is the information that was defined in the contract and demonstrated as permissible purpose with consent from the individual consumer.
6 Disclosures to Consumers
6.1 Automatic Disclosures
Every new client request for tax account information through the TaxStatus application must be approved by the consumer via automated consent forms that are emailed and/or sent via mobile text messaging. All consumer consent activity is automatically syndicated to the respective client, so they are aware when the consumer has approved or denied the request. Consumers are notified by email confirmation of any changes they make to their consent.
6.2 Disclosures on Request
Using the secure TaxStatus web portal, customers may request a history of all their consents and all subsequent client data collection activity regarding that consumer. Each consumer will have their own, single credential to login to the portal, through which they will be able to see all activity within their account, across all banks.
6.3 Disclosures in the Event of an Adverse Action
As courier of the data, TaxStatus has no control and therefore no responsibility for how each client judges the data. It is the responsibility of the client or the client of the client (the user) to make this disclosure regarding an adverse action to the consumer whose data is being provided. (An adverse action is defined as an action (denial or cancellation of an application or terms of coverage or denial of employment) that is adverse to the interests of the consumer).
6.4 Provide Consumers with a Summary of Their Rights
Consumers may download a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act” (defining their rights under the FCRA) from the secure TaxStatus secure web portal (or from TaxStatus’ client). (See section 2.4 above for additional information).
6.5 Charges for Disclosures
Consumers may review their disclosure history from TaxStatus’ reports of their Federal Tax Information for no fee.
7 Fraud Control and Monitoring
Under its contractual obligations with its clients, TaxStatus and its clients have agreed that all accounts and transactions will be monitored for fraud. Due to the thorough process required for IRS authorization and consent, someone falsifying their identity is highly unlikely. However, should the IRS be notified of a case of identity theft, the IRS will block those taxpayer records and they will not be available.
7.1 Fraud Monitoring
The TaxStatus application and information system monitors each request for both consent and data. Research is performed on any transaction whenever data requests appear abnormal or exceed baseline behavior parameters.
7.1.1 Fraud Monitoring: Volume
Multiple requests for the same information (for example, requesting the same data multiple times a day), suggesting possible fraudulent behavior, will trigger an alarm to notify the CISO. An investigation will be performed to determine whether any compromise has occurred.
7.1.2 Fraud Monitoring: Velocity
Multiple, rapid login requests to the web portal, suggesting possible fraudulent behavior, will trigger an alert to notify the CISO. An investigation will be performed to determine whether any compromise has occurred.
7.1.3 Fraud Monitoring: Time of Day Restrictions
High volume, high velocity API requests are expected to occur in batches, at night. Any human based interactions that occur during off-hours (e.g., 12:00 – 5:00 am ET) will trigger an alert to notify the CISO, who will initiate an investigation and notification of the client, depending on the results of the investigation.
7.2 Fraud: Identity Theft: Block Information
Should the IRS be notified of a case of identity theft, the IRS will block those taxpayer records and they will not be available. When TaxStatus becomes aware that a consumer has been the victim of identity theft or that an account has been set up under false pretenses, or a legitimate account has been compromised, an alert will be triggered to notify the CISO, and all subsequent requests for the data will be blocked.
7.3 Fraud: When Transaction Not Initiated by Consumer
If a client or consumer notifies TaxStatus that they have been a victim of identify fraud or that actions taken using the TaxStatus application were not their own, consumer’s account will be blocked from disclosure to any client, the account credentials reset, the data purged, and all consents revoked.
7.4 Fraud: Re-Enabling a Consumer Account
On a subsequent consent attempt, the application will recognize the block, and require that the individual contact Customer Service and verify their identity (by uploading a copy of their driver’s license or passport to the secure web portal) before the account will be unblocked and the consent accepted.
8 Exclusions
All Federal Tax Information to be provided to users in credit reports is excluded from disclosure, except for those items explicitly granted by each consumer’s consent to the user. At any time, consumers may elect to include or exclude information to each user or client by altering the consent permissions within the TaxStatus secure web portal.
8.1 Customer Notified of Exclusion
Consumers are notified by email confirmation of any changes they make to their consent.
8.2 Information That Must Be Excluded from Reports
Personally Identifiable Information (PII) is excluded (redacted) from all IRS transcripts and from summary and IRS reports (including printable reports) using unique, hashed identifiers to obfuscate PII. Both of these reports may be printed by the client at any time. The five IRS transcript types are:
- Tax Return Transcripts
- Tax Account Transcript
- Record of Account Transcript
- Wage and Income Transcript
- Verification of Non-Filing Letter
8.3 Tax Liens Paid More Than Seven (7) Years Prior to Report
Tax liens that have been paid will be excluded from reports but with consumer’s consent in the “Disclosure Consent” form, information about unpaid tax liens will be included.
8.4 Exemptions
Exemptions regarding reinvestigation requirements applicable to resellers or national security investigations are not applicable to TaxStatus’ contractual obligations to its clients.
9 Retention and Disposal of Credit Reports
TaxStatus retains the last version of the consumer’s tax information received to provide notification of account record changes. Upon the expiration of the consumer’s authorization, the data is purged.
9.1 Retention of Credit Reports
To provide account monitoring services, the system stores only the most recent information received to serve as basis to detect account changes.
9.2 Disposal of Credit Reports
All non-current data is deleted from the system as it is replaced with current data (the last version of a report for comparison purposes). Upon the expiration of the consumer’s authorization, the data is purged.
10 Disputes Regarding Incomplete or Inaccurate Information
TaxStatus serves as the direct conduit from the data banks of the Internal Revenue Service to the client or the user. In the event the consumer disputes the information that has been provided, TaxStatus has informed its clients in its contractual agreements that the procedure would be for the consumer to directly contact the IRS at: (800) 829-1040.
If the information is shown to be inaccurate or incomplete and the IRS agrees to amend it, TaxStatus’ client, the user, or the consumer may elect to re-request the data to see the changes at any time.
10.1 Reinvestigation If Information Disputed
This is an internal IRS process outside TaxStatus’ responsibilities.
10.2 Treatment of Inaccurate Information
This is an internal IRS process outside TaxStatus’ responsibilities.
10.3 Notice of Results of Investigation
This is an internal IRS process outside TaxStatus’ responsibilities.
10.4 Statement of Dispute
Although the IRS does not make note of disputes on the taxpayer account record, TaxStatus does offer the ability for the consumer to indicate that they have opened a dispute with the IRS for a specific tax period. In the secure web portal, the taxpayer may set a dispute flag and provide a textual notation. The dispute flag will remain active for 90 days or until the taxpayer removes it. The majority of the time, disputes are due to IRS backlog and are resolved in due course, often within 90 days. The taxpayer can choose to re-enable the flag as often as they like.
10.4.1 InclusioninSubsequentReports
While the dispute flag is set, a notation will be added to the information disclosed to clients in both the application and on the Tax Status Report.
10.5 What to do in the event a consumer has a security freeze of their data?
TaxStatus LCC ensures that each of its contracts with other credit reporting agencies requires that the client ensures that none of the consumers whose information is being requested has a security freeze of their data current at the time of the request.
10.6 Mechanisms for Resolving Credit Disputes
Although disputes regarding inaccurate or incomplete information in tax return information are outside the responsibilities of TaxStatus, TaxStatus encourages its clients to inform consumers of the following organizations that may be able to assist with the resolution of disputes.
10.6.1 The Taxpayer Advocate Service (TAS )is an independent organization that operates within the IRS. The TAS helps ensure that all taxpayers are treated fairly. If taxpayers are having trouble resolving tax problem(s), they can contact the TAS to get assistance from a local advocate. There is at least one TAS office in every state. To find the address and phone number of a local TAS office, visit the IRS website or call 1-877- 777-4778. Or complete Form 911 (Request for Taxpayer Advocate Service Assistance) and fax/mail it to a local TAS office.
10.6.2 Low Income Taxpayer Clinics (LITCs) help individuals to resolve tax disputes with the IRS, including tax audits, appeals, and collection matters. The LITC Program receives some funding from the IRS, but it’s considered an independent organization. Taxpayers may qualify for free or low-cost assistance if they meet certain LITC income requirements and other criteria. Use the LITC map to find a local clinic or see IRS Publication 4134 (Low Income Taxpayer Clinic List). For general questions, contact the LITC Program Office by phone (202-317-4700) or by email at LITCProgramOffice@irs.gov.
10.6.3 The IRS Office of Appeals is an independent organization within the IRS that helps taxpayers resolve their tax disputes through an informal, administrative process. Their mission is to resolve tax controversies fairly and impartially, without litigation. Appeals reviews cases after the IRS has made its decision, offering an objective point of view on each appealed case. These mediation programs are designed to help taxpayers resolve disputes at the earliest possible stage in the audit or collection process. See details at: https://www.irs.gov/compliance/appeals.
11 Complaints Regarding Privacy or Fairness
11.1 Complaints to the Internal Revenue Service (over the privacy of Federal Tax Information):
If a consumer suspects that the privacy of their Federal Tax Information has been breached or disclosed or used improperly in a manner unauthorized by law or without the consumer’s permission, they are advised to contact:
The Director of the Office of Privacy, Governmental Liaison and Disclosure: Internal Revenue Service
Room 7050 OS:P
1111 Constitution Ave. NW Washington, DC 20224
The Treasury Inspector General for Tax Administration (TIGTA) 1-800-366-4484, or complaints@tigta.treas.gov
11.2 Complaints to the FTC or CFPB (regarding unfair practices under the FCRA):
If a consumer suspects that they have been the victim of fraud, identity theft, or other unfair or deceptive business practices, they are advised to directly contact the Federal Trade Commission Consumer Response Center at 1-877-FTC-HELP (1-877-382-4357) or the Consumer Financial Protection Bureau at (855) 411-2372 or submit a complaint at:https://www.consumerfinance.gov/complaint.
The following is available from the secure TaxStatus secure web portal and from TaxStatus’ clients, as well as from the Federal Trade Commission and the Consumer Financial Protection Board.
(https://www.taxstatus.com/fcra)
SUMMARY OF YOUR RIGHTS UNDER THE FAIR CREDIT REPORTING ACT
Para información en español, visite www.consumerfinance.gov/learnmore o escribe a la Consumer Financial Protection Bureau, 1700 G Street N.W., Washington, DC 20552.
The federal Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. There are many types of consumer reporting agencies, including credit bureaus and specialty agencies (such as agencies that sell information about check writing histories, medical records, and rental history records).
Here is a summary of your major rights under the FCRA. For more information, including information about additional rights, go to www.consumerfinance.gov/learnmore or write to: Consumer Financial Protection Bureau, 1700 G Street N.W., Washington, DC 20552.
You must be told if of consumer information in your file has been used against you. Anyone who uses a credit report or another type report to deny your application for credit, insurance, or employment – or to take another adverse action against you – must tell you, and must give you the name, address, and phone number of the agency that provided the information.
You have the right to know what is in your file. You may request and obtain all the information about you in the files of a consumer reporting agency (your “file disclosure”). You will be required to provide proper identification, which may include your Social Security number. In many cases, the disclosure will be free. You are entitled to a free file disclosure if:
- A person has taken adverse action against you because ofi nformation in your credit report;
- You are the victim of identity theft and place a fraud alert in your file;
- Your file contains inaccurate information as a result of fraud;
- You are on public assistance;
- You are unemployed bu texpect to apply for employment within 60 days.
In addition, all consumers are entitled to one free disclosure every 12 months upon request from each nationwide credit bureau and from nationwide specialty consumer reporting agencies. See www.consumerfinance.gov/learnmore for additional information.
- You have the right to ask for a credit score. Credit scores are numerical summaries of your creditworthiness based on information from credit bureaus. You may request a credit score from consumer reporting agencies that create scores or distribute scores used in residential real property loans, but you will have to pay for it. In some mortgage transactions, you will receive credit score information for free from the mortgage lender.
- You have the right to dispute incomplete or inaccurate information. If you identify information in your file that is incomplete or inaccurate, and report it to the consumer reporting agency, the agency must investigate unless your dispute is frivolous. For an explanation of dispute procedures, see www.consumerfinance.gov/learnmore.
- Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information. Inaccurate, incomplete or unverifiable information must be removed or corrected, usually within 30 days. However, a consumer reporting agency may continue to report information it has verified as accurate.
- Consumer reporting agencies may not report outdated negative information. In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old.
- Access to your file is limited. A consumer reporting agency may provide information about you only to people with a valid need – usually to consider an application with a creditor, insurer, employer, landlord, or other business. The FCRA specifies those with a valid need for access.
- You must give your consent for reports to be provided to employers. A consumer reporting agency may not give out information about you to your employer, or a potential employer, without your written consent given to the employer. Written consent generally is not required in the trucking industry. For more information, go to www.consumerfinance.gov/learnmore.
- You may limit “prescreened” offers of credit and insurance you get based on information in your credit report. Unsolicited “prescreened” offers for credit and insurance must include a toll-free phone number you can call if you choose to remove your name and address from the lists these offers are based on. You may opt out with the nationwide credit bureaus at 1-888-5-OPTOUT (1-888-567-8688).
- The following FCRA right applies with respect to nationwide consumer reporting agencies:
CONSUMERS HAVE THE RIGHT TO OBTAIN A SECURITY FREEZE
You have a right to place a “security freeze” on your credit report, which will prohibit a consumer reporting agency from releasing information in your credit report without your express authorization. The security freeze is designed to prevent credit, loans, and services from being approved in your name without your consent. However, you should be aware that using a security freeze to take control over who gets access to the personal and financial information in your credit report may delay, interfere with, or prohibit the timely approval of any subsequent request or application you make regarding a new loan, credit, mortgage, or any other account involving the extension of credit.
As an alternative to a security freeze, you have the right to place an initial or extended fraud alert on your credit file at no cost. An initial fraud alert is a 1-year alert that is placed on a consumer’s credit file. Upon seeing a fraud alert display on a consumer’s credit file, a business is required to take steps to verify the consumer’s identity before extending new credit. If you are a victim of identity theft, you are entitled to an extended fraud alert, which is a fraud alert lasting 7 years. A security freeze does not apply to a person or entity, or its affiliates, or collection agencies acting on behalf of the person or entity, with which you have an existing account that requests information in your credit report for the purposes of reviewing or collecting the account. Reviewing the account includes activities related to account maintenance, monitoring, credit line increases, and account upgrades and enhancements.
- You may seek damages from violators. If a consumer reporting agency, or, in some cases, a user of consumer reports or a furnisher of information to a consumer reporting agency violates the FCRA, you may be able to sue in state or federal court.
- Identity theft victims and active duty military personnel have additional rights. For more information, visit www.consumerfinance.gov/learnmore.
States may enforce the FCRA, and many states have their own consumer reporting laws. In some cases, you may have more rights under state law. For more information, contact your state or local consumer protection agency or your state Attorney General. For information about your federal rights, contact:
Para información en español, visite www.consumerfinance.gov/learnmore o escribe a la Consumer Financial Protection Bureau, 1700 G Street N.W., Washington, DC 20552.
