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Economists explain the idea of “opportunity cost” as the value of the next best way a resource could have been used. For example, the opportunity cost of the time spent attending college is probably greater than the value of actual checks that are written to pay tuition to that college, therefore making up the lion’s share of the “cost” of such an endeavor. It is thinking like this that leads economists to suggest that getting a refund from the IRS is actually not a great idea. Instead of giving that money to the government, the taxpayer could have kept the money, earned interest on it, and used that money to pay off debt or purchase things they wanted or needed. As if that is not enough reason to encourage people not to overpay taxes in anticipation of getting a refund, the IRS came up with another step this year that is serving to encourage people not to overpay taxes. It is the identity quiz that must be taken before a taxpayer can receive a refund to which they are entitled.
I am hearing from colleagues, acquaintances, and the media that many people who are owed tax refunds are being contacted before those checks are sent out. As some have pointed out, the IRS doesn’t care who pays the tax bill, but they want to make sure that they are only sending the refund to the person who deserves it. From what I have heard, the questions seem to be questions that can be answered by information that the IRS has access to, information that might have shown up on a tax return from the past. However, the fact that there is some depository of information about me out there that can be accessed disturbs me. It is even more disturbing to think that it is entirely possible that I would not be able to correctly answer the questions given to me. As was described on one radio broadcast, one elderly woman was told that she failed the test, and explained to a relative “they told me I am not me!” What a scary thought!
My daughter has already figured out how to break any passwords we have tried to set on computers and TVs. Indeed, I can recall times that she set passwords that have denied me access to shows I wanted to watch, or to my own account on my computer. The idea that one could set a password to restrict access to potentially large sums of money must sound as silly to the IRS as to parents of children who are probably the most technologically savvy members of their families. I therefore see why the identity questions seem to make a lot of sense. If my daughter can set a password that will keep me from watching TV, passwords can’t be the most effective way to assure identity. Still, the fact that people I know have failed the test makes me wonder if there is a more efficient way. And, of course, this all points to the difficulty with identity theft in our economy in general.
And so, I leave my readers with several questions. Does anyone else have trouble with the idea that the government has access to so much data about the details of our lives? Have any of my readers needed to take this quiz, and if so, how did you do (I know Ph.Ds. who failed it, so don’t be ashamed!)? What if a relative prepares tax returns for an elderly taxpayer; who answers the questions? Also, can anyone think of a better way for the IRS to verify a person’s identity?
