During the last tax season, I had several clients – even in my very small tax practice – experience a new twist in tax-related identity theft.
Clients received notices from the IRS thanking them for filing their 2014 tax return, although we had not yet even filed one. Someone else used their stolen Social Security number to file a tax return and claim a fraudulent refund. The thieves used stolen Social Security numbers and even stolen Employer Identification Numbers (EIN) from a business to create false W2 forms to support the false claims.
Most often, people aren’t even aware of the identity theft until filing their legitimate tax return, which gets rejected, or when a letter arrives from the IRS or their state asking them to confirm their identity.
Recently, the IRS has put forth an effort to try to stop suspicious tax returns by sending a 5071C letter to any taxpayer when they receive a return that looks suspicious. The letter is sent through the U. S. Postal Service and asks taxpayers to verify their identity in one of two ways:
a website portal, or
a special toll-free telephone number
The IRS indicates that the website is the fastest and safest way for you to verify your identity.
If you receive the 5071C letter, it means the IRS has received a tax return from you. If you have not filed a return yet, you need to contact the IRS and let them know. The letter will give instructions for what to do next. If you have filed your tax return, go ahead and complete the verification. This past filing season, the State of Ohio randomly selected taxpayers to verify their identity for refund claims. According to the clients I spoke with, they were asked a series of questions related to past purchases of vehicles, previous addresses where they had lived, and the cities they had lived in.
It is important to know that the IRS will never contact you by email or by social media, at least not currently, so any requests to verify your identity via email, phone call or text are definitely not from the IRS.
Above all, stay in touch with your CPA. If you get a letter from the IRS or your state asking for additional tax monies, a change in your tax return, questions about your tax return or even a notice that you haven’t filed your tax return, do not assume these notices are necessarily correct. Many times an assessment for additional tax is not warranted, and a letter from your CPA explaining why you would disagree with their proposed adjustment is sufficient in resolving the matter.
Have you been or almost been the victim of tax-related identity theft? What steps did you take to resolve or prevent the false claims?
Susan A. Moussi,
SMD Tax & Divorce Financial Planning Consultants, Inc.
Phone: 614.429.4172 firstname.lastname@example.org