1. Still waiting to hear how this all turned out
Page 109
Executive Summary
In 2013 IRS told congress the only way to slow down refund fraud was to do the following:
Delay filing season
Quicker document verification
Later issuance of refunds
Still waiting to hear how this all turned out
04: Tax Identity Theft

2. Executive Summary REALITY OF SITUATION
Page 109
Executive Summary
REALITY OF SITUATION
While IRS has stepped up their efforts the fraudsters sophistication grows faster than IRS ability to identify.
The ATM of the US tax systems seems to be slowing.
04: Tax Identity Theft

3. Executive Summary IRS did the following in 2017 processing season:
Page 109
Executive Summary
IRS did the following in 2017 processing season:
W-2 verification project – Voluntary
Additional data elements
Information sharing with partners
Education and Outreach
Partnering with 23 states to identity fraudulent returns (drivers license database)
04: Tax Identity Theft

4. Page 109
Executive Summary
Collection of Driver’s License Information by Practitioners
Many practitioners are skeptical and clients even more so, but Alabama, New York and Ohio require it.
A significant number of other states insist it solidifies the security profile of the return and helps speed up the refund process.
The primary assumption in the industry is the practice will only increase.
04: Tax Identity Theft

5. Executive Summary Driver’s License Some industry discussions
Page 109-Bonus
Executive Summary
Driver’s License
Some industry discussions
blog.aicpa.org/2017/03/heres-the-skinny-on-drivers-license-information-for-state-tax-returns.html
journalofaccountancy.com/news/2017/feb/drivers-license-information-on-state-returns html
irs.gov/individuals/new-security-safeguards
ustaxhelp.com/2017/02/the-irs-requires-taxpayers-to-provide-drivers-license-information-when-e-filing-taxes/
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6. Page 111
Executive Summary
Taxpayers are turning to their tax professionals to assist with protecting themselves from fraud:
04: Tax Identity Theft

7. Page 111
Executive Summary
optoutprescreen.com
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8. Page 111
Executive Summary
optoutprescreen.com
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9. Page
Executive Summary
Taxpayers are turning to their tax professionals to assist with protecting themselves from fraud:
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10. Page 112
Executive Summary
IRS Resources
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11. Executive Summary The Summary of IRS Identity Case Management
Page
Executive Summary
The Summary of IRS Identity Case Management
Fail to handle in a timely fashion
Limited communication to victims
Poor processing of identified returns
Poor organization of IRS guidelines in IRM
Poor use of information gathered from prior cases.
04: Tax Identity Theft

12. How to Identify if an Individual is a Victim of ID Theft
Page 113
How to Identify if an Individual is a Victim of ID Theft
Warning Signs
Financial and medical record with unknown information.
Benefits that do not match owner.
Medical providers asking for information that does not match medical history.
Incorrect work history, i.e. SSA-7004
Unusual and unidentified charges on bank and credit statements.
04: Tax Identity Theft

13. How to Identify if an Individual is a Victim of ID Theft
Page
How to Identify if an Individual is a Victim of ID Theft
The IRS signals we have seen through the years
04: Tax Identity Theft

14. How to Identify if an Individual is a Victim of ID Theft
Page 114
How to Identify if an Individual is a Victim of ID Theft
Some of the new twists we are seeing:
Closed Business communications.
Individual information on business accounts that never employed the individual.
Unexpected unpaid taxes.
Original returns processed as amended
A corporate entity springs suddenly back to life.
04: Tax Identity Theft

15. Dealing with IRS for Tax Account Fraud
Page 114
Dealing with IRS for Tax Account Fraud
The IRS says/asks that the following should occur:
Upon discovery of Tax Refund Fraud, file Form
Respond to any IRS notice ASAP.
File taxes as required.
Visit irs.gov/identity theft to determine current issues.
Updated address irs.gov/individuals/identity-protection
04: Tax Identity Theft

16. Dealing with IRS for Tax Account Fraud
Page 114
Dealing with IRS for Tax Account Fraud
In the IRS Information and guidance additional recommendations provided will be:
File a FTC report (go to identitytheft.gov/?utm_source=takeaction
04: Tax Identity Theft

17. Dealing with IRS for Tax Account Fraud
Page 114
Dealing with IRS for Tax Account Fraud
In the IRS Information and guidance additional recommendations provided will be:
File a report with the local police
04: Tax Identity Theft

18. Dealing with IRS for Tax Account Fraud
Page 114
Dealing with IRS for Tax Account Fraud
The IRS response will be:
Confirm/Process Form (new fax number for submission is )
Taxpayer account will be coded to indicate a report of identity theft.
04: Tax Identity Theft

19. Dealing with IRS for Tax Account Fraud
Page 114
Dealing with IRS for Tax Account Fraud
The IRS response will be:
Reconcile the account to reflect valid return information.
Place a theft indicator on the account (IP PIN requirement) if the IRS determines it necessary.
Place a hold for all communication during the investigation.
04: Tax Identity Theft

20. Dealing with IRS for Tax Account Fraud
Page 115
Dealing with IRS for Tax Account Fraud
Our role in the process:
Determine if it is best to file Form now or later.
Review the event with the client.
Obtain an engagement for the theft issues.
Obtain Form 2848 – IRS can be difficult here.
Make your best attempt to get a transcript.
Review transcripts to identify fraudulent activity.
04: Tax Identity Theft

21. The Notices Used by IRS for Identity Theft
Page 115
The Notices Used by IRS for Identity Theft
IRS uses a variety of notices and occasionally a new one will appear, look on Basic Tools for Tax Professional, Understanding your Notice. LT 5071C
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22. The Notices Used by IRS for Identity Theft
Page 115
The Notices Used by IRS for Identity Theft
Letter 5071C
Go to idverify.irs.gov – Not currently available all service has been moved to telephone support only, not likely to return as has been closed since August of 2016
Call – Long waits and lots of questions, have return information available to discuss
Only individuals who have received LT5071C or LT4883C will be assisted on above number
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23. The Notices Used by IRS for Identity Theft
Page 116
The Notices Used by IRS for Identity Theft
LT5073C – IRS confirmation of identity theft report
Oops cannot find this one on irs.gov
Normally a response to Form filing
May be a response of IRS identification of an ID Theft Issue
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24. The Notices Used by IRS for
Identity Theft
Page 116
There is no information from the IRS currently available on this notice.
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25. The Notices Used by IRS for Identity Theft
Page 116
The Notices Used by IRS for Identity Theft
LT4883C – IRS needs a response
Call the idverify number of
Prior year return data will be needed to verify authorized individual
This was not the taxpayer’s return that generated this letter.
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26. The Notices Used by IRS for Identity Theft
Page 116
The Notices Used by IRS for Identity Theft
LT4310C – IRS has identified possible ID Theft using one of its identification techniques No need to contact IRS IRS now acknowledges this notice
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27. The Notices Used by IRS for Identity Theft
Page 116
The Notices Used by IRS for Identity Theft
LT239C – IRS thinks the taxpayer is a victim and has placed an indicator on the account
Issues:
IRS has committed the taxpayer to the ID Fraud procedures.
If IRS is right great, if they are wrong a mess.
No help on irs.gov available they do not acknowledge the notice.
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28. The Notices Used by IRS for Identity Theft
Page 116
The Notices Used by IRS for Identity Theft
The IP PIN Family of Notices – CP01 The IRS has confirmed the placement of the IP PIN indicator on the account. For the current year and the next an IP PIN must be entered on return
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29. The Notices Used by IRS for Identity Theft
Page 116
The Notices Used by IRS for Identity Theft
The IP PIN Family of Notices – CP01A The annual notification of the IP PIN, the taxpayer will be assigned a new IP PIN EVERY YEAR
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30. The Notices Used by IRS for Tax Identity Theft
Page 116
The Notices Used by IRS for Tax Identity Theft
The IP PIN Family of Notices – CP01B The return was filed with an IP PIN and IRS needs more info – The taxpayer must contact IRS or return will not be processed.
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31. The Notices Used by IRS for Tax Identity Theft
Page 116
The Notices Used by IRS for Tax Identity Theft
The IP PIN Family of Notices – CP01C Theft information has been received and processed by IRS. An indicator has been attached to the account.
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32. The Notices Used by IRS for Tax Identity Theft
Page 117
The Notices Used by IRS for Tax Identity Theft
The IP PIN Family of Notices – CP01F The IRS is asking the taxpayer to join the IP PIN family for reasons other than tax identity theft
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33. The Notices Used by IRS for Tax Identity Theft
Page 117
The Notices Used by IRS for Tax Identity Theft
The IP PIN Family of Notices – CP01H The IRS has been notified (generally the SSA) that the taxpayer is deceased and IRS will not process the return
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34. The Notices Used by IRS for Tax Identity Theft
Page 117
The Notices Used by IRS for Tax Identity Theft
The IP PIN Family of Notices – CP01S Acknowledgement of identity theft claim. Compromised processing will ensue from this point forward.
04: Tax Identity Theft

35. The Identity Protect Personal Identification Number (IP PIN)
Page 117
The Identity Protect Personal Identification Number (IP PIN)
The IP PIN – Once you are in you are in, no if ands or buts. The period will be 4 tax periods at least and if IRS makes a determination more. Each period should have a CP01A received by the taxpayer.
04: Tax Identity Theft

36. The Identity Protect Personal Identification Number (IP PIN)
Page 117
The Identity Protect Personal Identification Number (IP PIN)
Some pointers on the IP PIN receipt:
CP01A normally is received by taxpayer between 12/24 and 01/15
If there is an error on the notice call
If the notice was not received or lost go to irs.gov. Register at “Secure Access” if not previously done so.
Go to irs.gov/individuals/retrieve-your-ip-pin or call (21days)
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37. The Identity Protect Personal Identification Number (IP PIN)
Page 117
The Identity Protect Personal Identification Number (IP PIN)
NO IP PIN and a rejection will follow
Each year is a new number
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38. The Identity Protect Personal Identification Number (IP PIN)
Page
The Identity Protect Personal Identification Number (IP PIN)
Some issues:
CP01A fails to arrive
Get it replaced by calling IRS at
Go to irs.gov/individuals/get-an-identity-protection-pin
04: Tax Identity Theft

39. Obtaining a Copy of the Fraudulent Returns
Filed Using the Taxpayer Account
Page 119
A helpful piece of information for the taxpayer is a copy of the “fraudulent” return(s). Why?
Local law enforcement will use to pursue the case. BUT
IRS will decline to release until the investigation is complete. Why?
To insure the requester of the “fraudulent” returns is in fact the injured taxpayer.
04: Tax Identity Theft

40. Obtaining a Copy of the Fraudulent Returns
Filed Using the Taxpayer Account
Page 119
The procedures for obtaining the “bad return” , under Program Manager Technical Advice are specific and the request must include:
Name and Social Security Number
Mailing Address
Tax year or years requested, and
The statement “I declare I am the taxpayer under penalties of perjury.”.
A copy of a government issued photo ID.
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41. Obtaining a Copy of the Fraudulent Returns
Filed Using the Taxpayer Account
Page 119
A person who makes the request, a POA, for the return must also:
Indicate their name and FEIN.
Relationship to the identity theft victim.
Mailing Address.
CAF number.
The statement “I declare that I am the person authorized to obtain the information requested”.
04: Tax Identity Theft

42. Obtaining a Copy of the Fraudulent Returns
Filed Using the Taxpayer Account
Page 120
There are some additional steps that must be followed by the “victim” of the theft:
A copy of a government issued ID with a picture.
Per the prior statement a copy of the Form 2848 if it applies
The request must be sent to:
IRS; PO Box 9039: Andover, MA
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43. Obtaining a Copy of the Fraudulent Returns
Filed Using the Taxpayer Account
Page 120
The IRS continues to insist that they not only are required to protect the identity of the injured taxpayer but that of the scammer.
However, Chief Counsel’s office says: The fraudulent return is a nullity, as it does not qualify as a return per IRC 6103 BUT still is subject to disclosure restrictions of IRC 6103(a).
IRS
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44. Obtaining a Copy of the Fraudulent Returns
Filed Using the Taxpayer Account
Page 120
Okay the taxpayer can get part of the return pursuant to the IRS’s ability to share information used in processing the T/P’s return.
04: Tax Identity Theft

45. Obtaining a Copy of the Fraudulent Returns
Filed Using the Taxpayer Account
Page 120
Some closing issues for working with the IRS:
No copy of the return for stolen dependent’s information, the taxpayer/spouse must be listed on return to permit disclosure under IRC 6103(a).
The process is completely frustrating because:
It takes a long time.
and
IRS seems to care more for the bad guy than the T/P.
04: Tax Identity Theft

46. Protecting your Tax Data
Page 120
Protecting your Tax Data
What the IRS says:
Don’t respond to s with IRS in the from field
Check out your tax preparer
Secure your return
If you are hiring a preparer to do your taxes, ask the preparer what systems he or she has in place to keep your physical paperwork and your electronic data safe.
04: Tax Identity Theft

47. What Kind of Resources are Available
Page 121
What Kind of Resources are Available
When faced with the problem:
IRS Identity Protection Specialized Unit – Overloaded but they can help.
Taxpayer Advocate Service – A final cry if IRS has failed your client
Federal Trade Commission – Can help law enforcement link the threads together
04: Tax Identity Theft

48. What Kind of Resources are Available
Page 122
The IRS Guide to Identity Theft:
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49. Bonus - Some Additional Steps
Page
Consider these steps also:
File Form 8822 to insure IRS’s file reflects the correct address.
Obtain a transcript of the following if possible:
Account Transcript
Wage & Income Transcript
Return Transcript
Try not to file Form until it is clear it will be helpful to your client.
04: Tax Identity Theft

50. Tax Identity Theft is Spreading
Tax identity theft is no longer a problem for our client’s refund but an industry wide problem that is affecting every aspect of tax filing:
By a show of hands:
Our firm has had greater than 10% of our clients directly affected by identity theft.
Our firm has experienced theft of client records.
Our firm has purchased data breach coverage.
When a client encounters tax identity theft we counsel them on how to deal with the theft in addition to the tax filing issues.
04: Tax Identity Theft