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Tax CPA discusses 2012 IRS Identity Theft Prevention

Tax CPA discusses Identity Theft

Gary Bode, CPA: staying current on IRS issues is part of the job. For a free phone consult call (910) 399-2705.

Some of this article uses various Accounting Today reports as a reference.

The IRS works hard to prevent identity theft and related fraud.

Identity Theft Data Filters

Steven T, Miller, IRS Deputy Commissioner testified to Congress about the potential number of taxpayers saved by, and the dollar amount of refunds protected, through IRS identity theft filters since 2008. 460,000 Taxpayers and $1.4 Billion in prevented identity theft.

Identity Theft Clearinghouse; established January 2012

This component of the IRS’ Criminal Investigation unit:

  • Develops and refers identity theft schemes to field offices.
  • Coordinates operations in multi-jurisdictional cases.
  • Supports ongoing criminal investigations.

Cooperation with Local Authorities to help Identity Fraud Victims

Privacy issues ironically hinder IRS cooperation with local authorities to help tax related identity theft victims. The IRS is aware of the problem and is working to be more responsive.

Publicity Campaigns

The IRS has multiple PR programs. They regularly tote the dangers of identity theft. Here’s one example. A private study found hundreds of thousands Social Security numbers publicly available through Non Profit Organization’s tax returns. The IRS responded with guidelines to prevent ongoing display of these numbers.

Rules for Tax Preparers

The IRS imposes operational conditions for tax preparers, some of which directly target identity protection.

Some Recent Scams

  • A manager for an H&R Block office was caught by a patrolman while using H&R Block’s Emerald cards to with draw client’s refunds from local ATMs. Presumably before clients picked up them up the next day. Refund card programs eliminate the mailing time of paper check refunds for clients without checking accounts.
  • A man stole the identity of unemployed folks and prepared tax returns for fraudulent returns to himself. Apparently manufacturing W-2s for them.

Consequences to the IRS

Sometimes you can’t win for trying. Note that the identity theft and other fraud data filters delay tax return processing and subject the IRS to complaints over delayed refunds. But obviously, not dispersing erroneous refunds is better than trying to recoup them later. The most vocal group this year was Earned Income Credit taxpayers who receive not only refunds, but additional money from the government. A major financial event for these folks. The IRS eliminated indirect support of the Refund Anticipation Loan industry this year, stating their turnaround time was adequate. In my experience, some of these folks want their money quick and were willing to pay dearly for a few days of faster turnaround through a Refund Anticipation Loan. Then the IRS had update issues early in the tax season when these folks usually file. Reports of verbal abuse and physical threats against tax preparers ensued.

I’m a tax CPA with a virtual office to accommodate long distance clients. Keeping current on IRS issues is part of the job. Please read any of the hundreds of postings on this site gauge my ability and attitude. For a free phone consult, call (910) 399-2705.


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