1. Preventing and Detecting Identity Theft: Partnering with the IRS to Meet the Challenge
Anita Douglas
Senior Stakeholder Liaison
November 13, 2015

2. IRS Strategic Approach
Prevention
Detection
Victim assistance
Enforcement

3. IRS Strategic Approach: Prevention and Detection
All returns pass through hundreds of filters
Accelerated return matching information
Imposed limits on number of direct deposit refunds issued to a single financial account
Locked deceased taxpayer accounts

4. Taxpayer Protection Program
Letter 4883C: taxpayer must call TPP toll-free number to verify identity
Letter 5071C: taxpayer should use idverify.irs.gov to verify identity
Letter 5447C: taxpayer may either call international TPP line or mail verification

5. Steps for IDT Victims For tax-related victims, IRS requires:
Complete IRS Form 14039, Identity Theft Affidavit
Respond immediately to any IRS letters or notices
Continue to file and pay taxes, even if by paper
Preparers need power of attorney (Form 2848) and CAF number to complete the form on client’s behalf

6. Completing a Form 14039
Submit only for taxpayers who have suffered a loss of personally identifiable information, such as an SSN
Check the appropriate box, i.e. Box 1 if the loss of PII is affecting tax administration
Identity verification required
Follow submission instructions

7. IRS Strategic Approach: Prevention and Detection
Approved use of information received from local police
Improved protection for SSN
Improved procedures to stop prisoner refund fraud
Partnered with financial institutions and debit card industry

8. IRS Strategic Approach: Prevention and Detection
To prevent IDT from reoccurring, we
Place indicators on taxpayers’ accounts
Issue Identity Protection PINs
Continue testing IP PIN program in Florida, Georgia and District of Columbia

9. IRS Strategic Approach: Prevention and Detection
Aggressive efforts yielding results
2.27 million confirmed IDT returns stopped
$15.8 billion protected plus $545.6 million refunds returned through partnership with financial institutions
1,063 new criminal investigations; 748 sentenced
Data is calendar year 2014

10. IRS Summit on IDT Recognition that IDT is always evolving
Pledge to fight a common enemy
Three working groups looking at:
Additional steps – especially on technology front
Short and long-term actions

11. IDT: New for 2016 Improved filters and modeling
New rules for ITIN users
Direct deposit limits remain in place
Mandatory device ID sharing

12. Identity Protection PIN
New number issued before each filing season via CP01A notice
Currently, no opt-out provision
Lost IP PINs may be retrieved online
Replacement IP PINs may be obtained from IDTVA, but subject return to scrutiny

13. Future of Victim Assistance
Methods of protecting taxpayer accounts under on-going review and evaluation
Movement toward online products, such as an online Form or Get an IP PIN
Results of location-specific pilot program being assessed
Centralization of inventory work underway

14. IDT: New for 2016
Centralization of IDT victim assistance work within Accounts Management
Reviewing next steps for Identity Protection PINs
Comprehensive review of EFIN process to help you protect your number

15. Partnering with the IRS
Know your clients; verify their identities
Don’t use your EFIN to file other preparers’ returns
Check EFIN numbers weekly
Notify the IRS if EFIN numbers are too high

16. Protecting Taxpayers and Your Business
Protect taxpayer data and your business from becoming data breach victims
Review your security arrangements
Review Publication 4557, Safeguarding Taxpayer Data

17. Protecting Taxpayers and Your Business
Securing taxpayer data is the law
Make a security plan using best practices
Data breach? Have a plan
Contact local IRS stakeholder liaison to notify IRS of data breach

18. Protecting Taxpayers and Your Business
Partner with IRS to share the warnings
Avoid /phone scams aimed at you or taxpayers
Recognize an “account takeover’ attempt
Urge clients to protect IP PINs, e-File PINs

19. Additional Information on IDT
Pub 4557, Safeguarding Taxpayer Data
Pub 5027, Identity Theft Information for Taxpayers
Pub 5199, Tax Preparer Guide to Identity Theft

20. W-2 Verification Code Pilot for 2016 Filing Season

21. W-2 Verification Code Pilot
One in a series of steps to combat ID theft and tax fraud
Pilot will test capability to verify authenticity of W-2 data filed with federal tax returns in 2016
IRS will soon name Payroll Service Providers
PSPs will reach out to some clients
Algorithm generates alphanumeric codes from selected data fields of the W-2
Verification codes appear on employees’ W-2s

22. W-2 Verification Code Pilot
Taxpayers enter verification codes on their e-filed federal tax returns
When processing returns, IRS recalculates codes
Matching codes = genuine W-2s
Verification codes not included in W-2 data submitted to SSA, states or local departments of revenue
Won’t affect state or local tax returns

23. W-2 Verification Code Pilot
We stress:
Omitting or using incorrect W-2 verification codes will not delay the processing of taxpayers federal tax returns
“test-and-learn” review after pilot
If integrity of W-2 information submitted by taxpayers increases, verification codes will remain an element of W-2s in the future

24. THANK YOU!!!
Anita Douglas