IRS auditor wants docs faxed

[Bird]

We have what should be an easy audit for a tiny plan, but the auditor works from her home and insists on everything being faxed for security.  She says the IRS says that using Sharefile or something similar is "disclosure."  Maybe I'm being stubborn but we're not faxing 80-100 pages from a fax machine, and I'm not inclined to spend even $1 on some program that will convert efiles to faxes.  I hate to be antagonistic but I'm inclined to talk to the supervisor on this...anyone have similar experience/solutions?

[RatherBeGolfing]

Yep, I have had similar issues where the only electronic means of delivery to the IRS is fax.  

We use an email to fax program anyways so that isn't an issue for us.  That said, with the slow pace of audits, I seriously doubt she would look at it right away so I would insist on sending it regular mail instead (if that is better for you).

[BG5150]

If there are SSNs on the report, are you even allowed to mail it (in certain states)?

[ESOP Guy]

1 hour ago, BG5150 said:

If there are SSNs on the report, are you even allowed to mail it (in certain states)?

You mean some lawmakers think that the possibility of dialing the wrong number on a fax is more secure then mail getting delivered to the wrong person? 

 

That has always been the reason I hate faxing anything with SSNs.  I can get an e-mail address confirmed correct before I send it by calling the person and asking did they receive the e -mail and demanding they send an e -mail back.  Now I know it is in my e-mail address book correct. 

Every time you dial a phone number you have the possibility to make a typo. 

This person can't go into the office or go out to the TPA's office every now and then?  I think I would think about digging my heels in as this can be sensitive data and the IRS does pay mileage for its field auditors (or at least it did back in the '80s when I was a field auditor for them.).  This person seems like they are demanding the taxpayers allow them to be comfortable and I am not sure the taxpayer owes them that duty.  

[My 2 cents]

Why not use some version of secure email?  Anyway, faxes are so 1980's!

[MoJo]

I've had agents demand a fax.  I tell them we don't have that capability (except through efax services - which essentially is the same as emailing) and that our secure portal is more secure.  They usually back down - but that requires a secure email system of some sort.

As a service provider - we prefer email delivery of some things (we have a portal for major data uploads) so we use a vendor to provide a secure portal for anything with SSN's or other non-discloseable info.  Just another "cost" of doing business....

[My 2 cents]

One cannot provide administrative services without having a means to send emails secure.  Just cannot be done. 

[BG5150]

We just use dead drops around town.

[ESOP Guy]

To be clear on my earlier comment I wasn't saying we don't have secure e-mail.  My point was e-mail once you confirm the person's address is correct in your e-mail address book you know the unsecured or secured e-mail is going to the right person. 

With a fax there is a chance for human error every time you type a phone number.  That alone as far as I am concerned makes a fax less secure then just about any type of e-mail. 

[RatherBeGolfing]

11 minutes ago, BG5150 said:

We just use dead drops around town.

This report Mr IRS agent, should you choose to accept it, will self destruct in 5 seconds....

[ETA Consulting LLC]

I've never had an issue with an IRS agent receiving information through email.  Of course, we wouldn't provide sensitive information (e.g. SSNs), but to suggest that EVERYTHING is faxed would suggest that the agent is being a little too ideological.  There are a few (in the IRS and DOL) that always seem to have a bad day; and will certainly ruin yours if you let them.

As a policy, I have been told on several occasions that they can receive emails, but cannot respond back through email.  So, I've always found that sending files through email have been efficient and effective with respect to getting through the audit.

Good Luck!

[MoJo]

43 minutes ago, ESOP Guy said:

With a fax there is a chance for human error every time you type a phone number.  That alone as far as I am concerned makes a fax less secure then just about any type of e-mail. 

Yes, there is always a chance you will miss dial - but the chance that you will misdial and connect to a fax machine is pretty slim.....

[ESOP Guy]

19 minutes ago, MoJo said:

Yes, there is always a chance you will miss dial - but the chance that you will misdial and connect to a fax machine is pretty slim.....

Back when I worked in an office and not at home if I got a fax to my office phone number it was easy to forward the call to the office fax machine before the sending machine timed out.  I found most often the incoming fax was for me and they dialed my office phone number from my business card instead of my fax number. 

If I didn't do that I also found the fax machine kept calling me back again and again. 

It might have happened only a couple times in 14 years but I did get information not intended for me.  So it is slim but I have seen it happen....

[CuseFan]

Maybe it's just on d-letter application questions, but all the IRS requests for information I've received say you can fax if it is less than 20 pages. For an agency that wants as many tax returns as possible to be paperless (e-filed), the IRS's Employee Plans division does not seem to be following suit.

[Bird]

Thanks for all the replies!  I will definitely push back.

[Kevin C]

I've never had an audit where the IRS agent insisted that information be faxed.  I have had them ask if I would fax things to speed up the process.  The few times they asked for a large amount of information, they changed their minds about a fax when I told them how many pages were involved.

Personally, if she told me she wanted a 100 page fax, I would fax it.  I prefer to pick my battles and save the aggravation of arguing with the government for times when they use an incorrect interpretation of the rules to justify penalizing our client.     

 

[SavingsRUS]

I doubt an IRS auditor who works from home is able to adequately safeguard the personably identifiable financial information for all of the employees whose data is included in the records and information the auditor is requiring the plan to provide. Given the sensitivity of the information and the current regulatory landscape with respect to the disclosure - whether intentional or unintentional - of private data, an aggrieved participant could argue that the company had a duty - as both the employer and a named fiduciary - to act in the best interest of participants by safeguarding the data. Unless the SSNs, DOBs, addresses, etc., are redacted from the records, faxing them to an IRS auditor's home office - or mailing them there - is not taking due care.

[ratherbereading]

I see no problem with faxing. I have lots of clients who request faxes, it's not 1980s! And as someone pointed out the chances of misdialing and getting another fax number are slim.  Just fax a few pages at a time.