New ATO Client Identity Verification Guidelines for Tax Practitioners

With remote work becoming more common, there are important security considerations for registered tax professionals in the client identity verification process. Without solid verification, perpetrators can attempt to steal the identity of taxpayers and use them to commit fraud.

The Australian Taxation Office (ATO) has developed new guidance on client identity verification in consultation with the Tax Practitioners Board (TPB), which should be read in conjunction with the TPB Practice Note.

The ATO guidelines are intended for registered tax practitioners using online services for agents or practitioner filing services via software.

Who should be verified?

Verification should be performed for:

  • All new customers, including new customer representatives.
  • New representatives of existing customers.
  • Existing customers for whom you are concerned, the customer may not be who they claim to be.

Customer Verification Record

Keeping identity documents can increase the risk of being targeted by criminals who engage in identity theft. Instead, the ATO recommends keeping contemporaneous records (e.g. a checklist) to demonstrate that proof of identity steps have been undertaken.

Verification methods

You must verify two separate pieces of ID using one or a combination of the methods listed in the table below. The exception is when primary photographic evidence of an identity document such as a driver’s license can be verified using the visual method.

Method The description
Visual Visual verification of a client’s identity documents.

Suitable when interacting with the customer in person or via video. For most customers, a visual check of the driver’s license will suffice.

Can be used to prove the identity of an individual representative of your client.

original ATO Compare the data provided by the customer to the data from the ATO systems.

Suitable for in-person interactions (including video) and remote interactions and digital interactions via software (eg online customer portals).

Cannot be used to prove the identity of an individual representative of your client unless the authorized representative is also your client.

Source DVS (Document Verification Service) Compare a customer’s details on government-issued identity documents to details held by a DVS provider.

This method is suitable for in-person (including video) and remote interactions.

Can be used to prove the identity of an individual representative of your client.

The ATO provides step-by-step instructions for each method, accessible by clicking on the hyperlinks above.

For clients acting on behalf of other persons or entities, you must verify both:

  • The identity of representatives using the above methods.
  • That the representative is authorized by the relationship verification.

Additional instructions are provided on the ATO website.

Customers without conventional IDs

Some customers may not be able to provide ID documents to pass customer verification. As stated by the TPB, you should take a flexible approach to verifying the identity of these customers.

Verification and Authorization Review

It may be appropriate to undertake client verification and relationship authorization reviews for current clients and individual representatives depending on the circumstances, including:

  • Risks associated with the request – eg change of contact details or bank details.
  • Risks associated with a representative – for example claiming to represent several people.
  • Irregularities in the client’s commitment to the practitioner.
  • Any discrepancy that arises in connection with the identity of the client or other matters.

Agents online

Online agents providing services through a web, cloud, or software-based customer portal should adopt even more robust customer verification processes that meet the following criteria:

  • Step 1 – Make sure the customer details match the ATO records (full name, TFN, DOB).
  • Step 2 – Verify two additional pieces of information using a combination of verification methods. You should limit the use of easily identifiable data through social media, such as residential address, email address, phone number or employer ABN.

If you create an online portal or software, you will need to meet additional requirements. You can seek further guidance from the Digital Partnership Office.

What to do if you suspect fraud

If you are unable to verify a customer or the information they provided and you suspect potential fraud:

  • Do not confirm incorrect specific information and provide the correct information. Instead, ask for additional information that you can use to verify their identity.
  • Do not give any private information to the customer and do not share or confirm pre-filled information.
  • Contact the ATO so they can stop any further attempts to use this identity.

Key points to remember

The ATO has released new guidance on client identity verification for tax practitioners. Tax professionals must ensure that they follow the guidelines and use the verification methods and procedures stipulated by the ATO to prevent criminals from stealing the identity of taxpayers and using them to commit fraud. The ATO guidelines should be read in conjunction with the new Tax Practitioner’s Board guidelines.

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