Describe the potential privacy problems that could arise in each of the following three areas of processing, and recommend the corrective action(s) to solve each problem identified:
The department of taxation in your state is developing a new computer system for processing individual and corporate income-tax returns. The new system features direct data input and inquiry capabilities. Taxpayers are identified by social security number (for individuals) and federal tax identification number (for corporations). The new system should be fully implemented in time for the next tax season.
The new system will serve three primary purposes:
1. Tax return data will automatically input into the system either directly (if the taxpayer files electronically) or by a clerk at central headquarters scanning a paper return received in the mail.
2. The returns will be processed using the main computer facilities at central headquarters. Processing will include four steps:
a. Verifying mathematical accuracy
b. Auditing the reasonableness of deductions, tax due, and so on, through the use of edit routines, which also include a comparison of current and prior years’ data
c. Identifying returns that should be considered for audit by department revenue agents
d. Issuing refund checks to taxpayers
3. Inquiry services. A taxpayer will be allowed to determine the status of his or her return or get information from the last 3 years’ returns by calling or visiting one of the department’s regional offices or by accessing the department’s website and entering his or her social security number.
The state commissioner of taxation and the state attorney general are concerned about protecting the privacy of personal information submitted by taxpayers. They want to have potential problems identified before the system is fully developed and implemented so that the proper controls can be incorporated into the new system.
Required
Describe the potential privacy problems that could arise in each of the following three areas of processing, and recommend the corrective action(s) to solve each problem identified:
- data input
- processing of returns
- data inquiry (CMA examination, adapted)
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