Ask The California Employment Tax And Payroll Tax Attorney – Tax Practitioners – What Are The Tell-Tale Signs Of Client Identity Theft

By Robert S. Schriebman

2022

Introduction
Every year the IRS holds a series of conferences with the private sector to discuss approaches and solutions to the ongoing problems relating to identity theft in both the public and private sectors. These conferences are known as The Security Summit. The Commissioner of Internal Revenue, Charles Rettig, is a key member of this Summit. In a recent meeting the Summit dealt with identity theft issues that have been raised by tax professionals. There have been many hacking incidents involving the tax preparer community that have been reported to the IRS.

One common concern the IRS hears from tax professionals is that they did not immediately recognize the signs of data theft. The Security Summit partners warn tax professionals to watch out for these critical signs:

• Client e-filed returns rejected because client’s Social Security number was already used on another return.
• More e-file acknowledgements received than returns filed.
• Clients responded to emails you did not send.
• Slow or unexpected computer or network responsiveness such as:
  – Software or actions take longer to process than usual;
  – Computer curser moves or changes numbers without touching the mouse or keyboard;
  – Unexpectedly locked out of a network or computer.

Tax professionals should also watch for warning signs when clients report they’ve received:

• An IRS Authentication letter sent to them even though they haven’t filed a return.
• A refund even though they haven’t filed a return.
• A tax transcript they did not request.
• A notice that someone created an IRS online account for the taxpayer without their consent.
• A notice the taxpayer wasn’t expecting that:
  – Someone accessed their IRS online account;
  – The IRS disabled their online account;
  – Balance due or other notices from the IRS that are not correct based on return
  filed or if a return had not been filed.

Conclusion
Cyber crooks are very busy. They are smart and tenacious. I hope the above tell-tale signs serve as service guidelines that will help you to detect and avoid problems within your practice and protect your clients as well. For more information see IR-2022-144 (August 2, 2022).

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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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