Accountants and business owners across California received emails from the state tax department this week that gave them access to confidential information regarding companies that were not theirs.
The messages alarmed accountants who worried someone would misuse the access and file information that would trigger an audit or penalty on their companies.
“It’s very concerning,” said Cathy Torres, a San Diego accountant who files taxes for nine companies. “I’ve gotten access to five accounts that were not mine.”
California Department of Tax and Fee Administration Deputy Director Stacie Spector said the messages went to 72,000 email accounts Tuesday night. They were intended to remind taxpayers about an upcoming filing deadline, but a technical error caused some people to receive the email more than 10 times and some taxpayers to receive access codes that would have allowed them to file taxes for eight companies that were not theirs.
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“A system process that sends out prepayment reminder emails unfortunately failed and prior system testing of this process did not identify the issue we ended up experiencing overnight,” she said.
The codes that were mistakenly sent to taxpayers would not allow someone to gain full access to an account, but could be used to make a payment. The department found that 32 people attempted to pay tax after receiving the message, but could not because they did not have enough information to complete the process.
About 1,600 people received the message 10 times. Forty-three people received it more than 10 times.
Spector said the department is working with the eight companies that were identified in the messages to address their concerns about their exposure.
The glitch follows the California Department of Tax and Fee Administration’s rocky roll-out of a new system that allows about 1 million businesses to file sales tax online.
The new program, called the Centralized Revenue Opportunity System, frustrated taxpayers who found it more difficult to use than the one it replaced.
This week, several independent business owners who pay California sales tax wrote on Twitter that they were startled by emails they received encouraging them to prepay taxes. They clicked the link and gained access to accounts for businesses that were not theirs.
“Did anyone else get like a bajillion e-mails from the tax department telling them they could pre-pay taxes but all of them were for companies they didn’t own?” wrote artist Susan Lau.
She contacted others who received similar messages, and was relieved to find that they each got links to the same companies. That reassured her that her information probably was not exposed, she said, although it appeared to them that tax information regarding dozens of companies had been distributed.
Torres called several of the companies she found when she clicked on the message to tell their representatives that their accounts were vulnerable. She also called the tax department.
“I was told I’d have a 121 minute wait” before speaking with someone, she said.
She hung up and called later.
An executive from one of the exposed companies said she was worried that someone would enter information into the program and cause the state to audit her business. She did not want to be identified in this news story because she did not want to draw attention from the department.
The state has been developing the new tax filing system since 2010 at a cost of $290 million. The Board of Equalization hired a contractor to build it in 2016.
The state handed the program to the Department of Tax and Fee Administration last year when the Legislature stripped the Board of Equalization of most its power, budget and staff.
That change put the state’s collection of sales tax under the control of Gov. Jerry Brown’s administration and took it away from the five-member Board of Equalization.
The tax department says the new system is working well and it is working to address the issues users have identified.
Board of Equalization Chairman George Runner said the recent complaints about the tax filing system show that taxpayers were better served by an elected tax board.
“Whenever you bring on a new system, it’s going to have its challenges. The biggest challenge I’ve heard from constituents is when they identify the issues they can’t find people to talk to. That’ what happens when the CDTFA became like the DMV. There’s no advocate for the taxpayer,” he said.