Identity theft or fraud is on the rise. This is particularly concerning for the tax community as identity thieves continue to target them. After all, businesses are a more tempting target for identity thieves compared to individuals for obvious reasons. They have higher credit limits, more substantial bank accounts, and more transactions regularly.
As identity thieves continue to target the tax community, the IRS Security Summit shares tips with tax professionals. So they can learn the signs of data theft and then react quickly to protect their clients. Moreover, the IRS Security Summit also shares a security program. This helps protect business owners and taxpayers from tax fraud involving identity theft.
Let’s look at what IRS Security Summit has to offer to reduce the risk of identity theft.
IRS Security Summit – Tips for Tax Professionals
One of the most common concerns from tax professionals includes reporting data theft that is not immediately recognized. To overcome this refrain, the IRS Security Summits urges the tax professionals to watch out for some of the signs that may indicate data theft. Some of the critical signs include:
- Rejection of the client’s e-filed returns as your client used their Social Security number to file another return.
- Receiving more acknowledgments than the returns filed by the tax professional.
- Client’s response to emails that their tax professionals did not send.
- Unexpected network, connectivity, and system-related issues, such as:
- The software takes longer than usual to process the actions,
- Uncontrolled movement of the cursor when you are not using the keyboard or mouse,
- Sudden locking down on the system or network.
Signs that may indicate data theft
Apart from these signs that may indicate data theft, tax professionals should watch out for the warning signs when they receive their clients’ reports. Some of the warning signs include.
- Receiving IRS Authentication letters including 5747C, 4883C, and 5071C, even when the return is not filed,
- Received a refund when the return is not filed,
- Receiving a tax transcript that the client didn’t request,
- Fake calls and/or emails from the tax professionals,
- Receiving notice that someone created an IRS online account for the client without their consent or receiving a notice that the IRS has disabled the client’s online account.
These are some of the warning signs that tax professionals should watch out for. In case the tax professional’s firm or the client is a victim of data theft or identity theft, it is best to take the /following actions.
- Get in touch with your local IRS Stakeholder Liaison. They will inform the IRS Criminal Investigation and other concerned authorities within the agency so the IRS can take appropriate steps to block the fraud and assist the tax professionals throughout the process.
- The tax professionals can also send an email to the federation of Tax Administrators at [email protected], get information on how to proceed, and report the victim’s information to the states.
The IRS IP PIN Program
The IRS Security Summit is a group of partners from different areas of expertise, including FinCen entities, tax entities, finance professionals, software developers, and others, with each one focusing on a specific area of concern.
As identity theft for tax fraud remains a major risk for businesses and individuals, the IRS encourages taxpayers to register for a security program known as IP PIN to put a halt to the activities of identity thieves who have gained access to your social security numbers. As a result, this security program can restrict data that identity thieves have obtained and may use for fraudulent activities. Since people can file a false tax return and obtain a refund without knowing the person had their identity stolen. This is a major breakthrough that can significantly reduce data theft incidents from tax professionals.
The IP PIN Program
We have highlighted some of the things that you should know about the IP PIN Program below.
- The IP PIN is a volunteer program that is not enforced by law. You can enroll in this program if you can verify your identity with your Individual Tax Identification Number (ITIN) or a Social Security number.
- If you enroll in the program, each year they generate an IP PIN for you, which is a 6-digit code. Using the 6-digit IP PIN, the concerned authorities can confirm your identity when you file tax forms for the year. Use the IP PIN to verify the following forms.
- 1040-SS, and
- Form 1040.
- If you share an incorrect IP PIN, your tax form will be rejected. If you are filing for a return, it takes longer to process a return with an inaccurate IP PIN will take longer to process as there will be a need to verify your identity.
- The 6-digit identity verification code changes annually hence minimizing the risk of compromising your data’s security.
- In case you lose your IP PIN, you can contact IRS for assistance, and they can help you retrieve your 6-digit identity verification code.
With IP PIN, you enjoy faster processing for tax returns and, most importantly, more security against identity theft.
One of the last and most critical things that tax professionals and individuals need to remember is that the IRS does not rely on the use of text messages or social media platforms to discuss your tax filings and refunds. Moreover, your involvement in an IRS tax audit or any other controversy involving tax, it is best to consult your tax lawyer. Specialized attorneys who deal with tax concerns can offer strategic solutions to all your tax-related problems. Learn more about tax laws here.