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Ask The California Employment Tax And Payroll Tax Attorney – Tax Practioners – What Are The Signs Of Data And Identity Theft?

By Robert S. Schriebman
2021

Introduction

The IRS and its Security Summit partners concluded their sixth annual conference with a warning to tax professionals to watch for tell-tale signs of identity theft.  The signs were divided into areas of what to look for in the office and what clients need to look for as well.  There were also suggestions on what professionals should do immediately upon signs of identity theft.  On August 17, 2021 the IRS issued IR-2021-170 dealing with tax professionals and signs of identity theft.  This article will discuss this latest press release.

In-House Signs of Identity Theft

The Security Summit received reports from tax professionals whose common issue was that they did not immediately recognize the signs of data and identity theft.  The Summit urged professionals to watch out for the following signs:

  • An e-filed return is rejected by the IRS because the client’s Social Security Number was already used on another return.
  • The practitioner received more e-filed acknowledgements than the returns he/she actually filed.
  • Clients responding to emails that the professional did not send.
  • Poor and slow computer network responsiveness, such as: software applications taking longer to process than usual; computer cursers moving or changing numbers without the mouse or keyboard being utilized; and unexpected lock-outs of a network or computer.

Client signs of Identity Theft

The Security Summit issued tell-tale signs provided by clients as follows:

  • The client receives IRS authentication letters even though they did not file returns.
  • Receiving a refund when no return was filed.
  • Receiving a transcript when none was ordered.
  • Communications from tax professionals that clients did not initiate.
  • A notification that the IRS created an online account without their consent.
  • Notices from the IRS that someone accessed their online account; or the IRS disabled their online account.

What Tax Professionals Should Do Immediately

The Security Summit had two recommendations for professional victims of identity and data thefts:

  • Report the breach to your local IRS Stakeholder Liaison – They will notify the Criminal Investigation Division who will take steps to block fraudulent returns especially phony refund claims
  • Email the Federation of Tax Administrators at [email protected].

Conclusion

The Security Summit suggested two publications that they recommend be in all tax professionals’ libraries:

  • IRS Publication 4557, Safeguarding Taxpayer Data, and Small Business Information Security: The Fundamentals
  • IRS Publication 5293, Data Security Resource Guide for Tax Professionals 

***

 Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments.  Mr. Schriebman is in private practice.  He is not affiliated in any way with the EDD and he is not employed by the EDD or any other agency of the State of California.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

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