7/14/2016

Tax-related Identity TheftPrevent, Detection and Victim Assistance

IRS Future StateAn evolving effort to meet taxpayer needs

Example Ongoing Initiatives

• Security Summit Group

• Taxpayer Assistance Centers

Appointment-Based System

• Improved Online Services

• Compliance Realignment

• Identity Theft Victim Assistance

• Enterprise Records Management

2 IRS Future State

Presentation Title | BOD 3

Security Summit Initiative 2016

• Increased sharing of data elements

from returns

• Enhanced password requirements for

software

• MOU signed by 40 state agencies, 21

tax industry partners

• Stronger cybersecurity framework

• Creation of a information sharing

center

Presentation Title | BOD 4

Security Summit Initiative 2016

• Created tax preparer work group

• Launched taxpayer education

campaign

• Pub 4524 – Security Awareness for

Taxpayers

• Tax preparers increasingly targeted

by cybercriminals

• Pub 4557 – Safeguarding Taxpayer

Data

• W-2 Verification Code Pilot

–Testing a 16-digit code for the Form W-2

–Taxpayer enters code on return as part of

W-2 entries

–Code helps verify authenticity information

on the Form W-2

• Improved return filtering and modeling

–Help stop business refundable credit fraud

IRS efforts to combat

Business Identity Theft

Presentation Title | BOD 6

IRS Impersonation Scams

• IRS doesn’t make threats of lawsuits

or jail

• IRS does not use email, texts or

social media to ask for personal or

financial data

• Impersonation scams netted $29

million from more than 5,500 victims

Suspicious IRS Emails / Phone Calls www.irs.gov/uac/Report-Phishing

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8

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• IRS reviewing improvements to EFIN

safeguards

–Stepped up efforts to expel EFIN abusers;

–Increased on-site visits as part of monitoring

process

• EFIN holders should review return numbers

during filing season

–e-Services Account updated weekly

–Excessive numbers can be reported to

e-Help Desk

Protect your EFIN

Truncated Taxpayer Identification

Numbers TTIN

The IRS issued final regulations (Internal

Revenue Bulletin 2014-31) on July 15, 2014

that allow you to truncate payee identification

numbers on statements. The goal of these

regulations is to reduce the risk of identity

theft that may stem from including a

taxpayer’s entire identifying number on a

payee statement.

2016

Tax Law Updates

Understanding Your CP148A

Notice

When we change a business address in our records,

we send a CP 148A to the new address.

We issue a notice of confirmation of an address

change to both the employer's former and new

address.

We update an address when we receive either a:

• Form 8822-B

• Employment tax return with an address different

from what's on our records.

Presentation Title | BOD 15

Victim Warning Signs

• Receive IRS notice

• Return rejected because of duplicate

SSN

• Receive IRS notice for year did not

file a return

• Record of wages from an unknown

employer

• Taxpayer Protection Program generates:

• Letter 4883C for prior-year suspicious returns

• Letter 5071C for current-year suspicious

returns

–Most common correspondence

–Taxpayer self-verifies at Idverify.IRS.gov

• Letter 5447C for suspicious returns with

foreign addresses

Tax-Related Identity Theft

Presentation Title | BOD 17

Victim Assistance

For returns stopped by filters:

• IRS issues Letter 5071C

• Taxpayer verifies identity online at

IDVerify.IRS.gov

• Fraudulent return is archived

• Taxpayer account marked with an

indicator

Presentation Title | BOD 18

Victim Assistance

For returns rejected because of

duplicate SSN:

• File Form 14039, Identity Theft

Affidavit

• File return by paper

• Pay any tax owed

• Respond to IRS notices or letters

• Resolution time approx. 120 days

Presentation Title | BOD 19

Victim Assistance

• Confirmed identity theft victims

generally eligible for an Identity

Protect PIN

• 2.7 million IP PINs issued for 2016

• IP Pin – additional layer of protection

for the SSN

• New six-digit PIN issued each year

Types of IRS notices

• CP01 – Notifies the taxpayer that the IRS

has resolved IDT issues and that an

identity theft indicator has been placed on

their account.

• CP01A – An annual notice that contains

the latest IP PIN.

• CP01F – A one-time notice for 2015 giving

certain taxpayers option of obtaining an IP

PIN through www.irs.gov/getanippin.

Presentation Name | W&I 20

• Six-digit number that adds an additional layer

of protection along with the SSN or ITIN

• Victims notified once tax-related IDT case

resolved

• Taxpayer will receive a CP01A notice

containing a new IP PIN each year

• Some taxpayers have the option of getting an

IP PIN from IRS.gov

• Enter numbers for all IP PIN holders

About the Identity Protection PIN

(IP PIN)

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The IP PIN Pilot

• There is an ongoing pilot program for

taxpayers who filed 2013 returns from Florida,

Georgia or District of Columbia.

• Taxpayers from these states did not have to

be victims of identity theft to qualify for this

program.

• Taxpayers could opt-in to get an IP PIN by

using online application at

www.IRS.gov/getanippin.

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Insert Get Transcript here

“Get Transcript” IRS Notices

• 4281G

• 4281B

• 4281F

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Instructions for Requesting Copy

of Fraudulent Returnshttps://www.irs.gov/Individuals/Instructions-for-

Requesting-Copy-of-Fraudulent-Returns

A victim of identity theft or a person

authorized to obtain the identity theft victim’s

tax information may request a redacted copy

(one with some information blacked-out) of a

fraudulent return that was filed and accepted

by the IRS using the identity theft victim’s

name and SSN.26

Business-related identity theft

• An identity thief files a business tax return

(Form 1120, 720 etc.) using the Employer

Identification Number of an active or inactive

business to obtain a fraudulent refund.

• An identity thief, using the EIN of an active or

inactive business, files fraudulent Forms 941

and W-2 to support a bogus Form 1040

claiming a fraudulent refund.

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Data Theft and Securing

Client Tax Information

• The risk is real; preparers are prime targets for

identity thieves

• Cybercriminal tactics constantly evolve

• Data loss can occur so many ways:

–Burglar steals office computers

–Cybercriminal breaches your systems using

phishing and malware schemes

–Disgruntled employees steals client info

–Dispose of old devices without erasing data

Data Theft

• Read Publication 4557, Safeguarding

Taxpayer Data

• Review current security measures

• Create a security plan

–Use top-notch software security

–Educate all employees

–Use strong passwords

–Secure Wi-Fi

–Encrypt PII emails

–Backup files

Steps to Protect Client Data

• Create a reaction plan for data theft

–Call IRS Stakeholder Liaison (found on

IRS.gov)

• Review Federal Trade Commission’s

“Business Center” to assist businesses with

data losses

–Notify police

–Notify businesses

–Notify clients

Plan Ahead for Data Loss

Presentation Title | BOD 34

Steady Progress Made

• 2,000 people convicted of stolen

identity refund fraud in recent years;

• 1,700 open investigations

• Improved and increased identity theft

filters

• Limited direct deposit refunds into

single accounts

• Worked with financial institutions

Presentation Title | BOD 35

Steady Progress Made

• Stopped 1.4 million IDT returns in

2015

• Protected $8.7 billion in refunds

• Closed 700,000 IDT cases in 2015

• Resolution time reduced to 120 days

• IRS, state tax administrators and tax industry

working together to increase public awareness

about security protections online and at home.

• Review Publication 4524, Security Awareness

for Taxpayers

• Consider printing and sharing this one-page

guide with your clients

Help Educate Clients

• The risk is real

• Make a security plan

• Make a data loss plan

• Contact Stakeholder Liaison if you experience

a data compromise

Summary