In an effort to stay one step ahead of scammers and identity theft, the Internal Revenue Service is introducing new identity verification precautions before processing tax returns and issuing refunds in situations where the IRS suspects that identity theft may exist. This is part of an aggressive strategy to prevent and detect identity theft in response to the Federal Trade Commission determining that fraudulent government documents like tax returns are the most common form of identity theft.
If you receive a 5071C letter from the IRS requesting that you verify your identity, do not ignore it; lack of response could delay your return processing and ultimately your receipt of any tax refund due to you. There are a couple of ways to respond to the IRS request. First, you can utilize the identity verification service website, idverify.irs.gov, which asks a series of questions that only the real taxpayer can answer. Alternatively, taxpayers can call the toll-free number provided in the letter. You will need to provide your name, social security number or individual taxpayer identification number, date of birth, contact information, and some information about your prior year (2013) and current year (2014) tax returns, including your adjusted gross income and deductions taken. To expedite the process, make sure to have this information on hand before going online or placing a call to the IRS. Once you have verified your identity, you will be asked to either confirm or deny that you filed the tax return in question. It will then take approximately six weeks for the IRS to process the return.
There are steps you can take to minimize the likelihood of becoming a victim of identity theft. The IRS suggests keeping your social security card and any documents that include your SSN at home in a secured area. You should never share your SSN unless absolutely necessary. Similarly, sharing any personal information over the phone, mail or internet should be handled carefully. On the internet, for instance, it is a good idea to verify a secure connection to the website (the URL will likely read “https” rather than “http”) and also ensure a secure connection to the internet with appropriate firewalls and anti-virus software active. It is also advisable to check your credit reports at least once per year for any new accounts or suspicious activity. Also, remember that the IRS only contacts taxpayers through USPS mail; they will never contact you over the phone or email to request personal information. If you do receive an email claiming to be from the IRS, you are strongly encouraged to forward it to email@example.com so the identity theft team at the IRS can investigate further.
If you are a victim of identity theft, there are several steps you should take to remedy the situation. First, you need to report the incident to the Federal Trade Commission through the website, www.consumer.gov/idtheft, or by using the FTC Identity Theft hotline at 1-877-438-4338. In addition, you should file a police report, contact the IRS, close any accounts with fraudulent activity, and contact one of the three major credit bureaus to place a ‘fraud alert’ on your credit records (www.equifax.com or 1-800-525-6285,www.experian.com or 1-888-397-3742, and www.transunion.com or 1-800-680-7289). If you are worried that your tax records are at risk due to a data breach or a lost or stolen purse/wallet, you are encouraged to contact a special ID protection unit of the IRS at 1-800-908-4490 as a preventive measure.
Identity theft places a very serious burden on its victims by creating obstacles to new job opportunities, loan or credit approval, education, housing and transportation. In some circumstances, victims of identity theft are even arrested for crimes they did not commit. Identity theft also presents many challenges to businesses and government agencies, which is why prevention and detection are so important.
If you would like to learn more, or have received a 5071C letter and would like our assistance, please do not hesitate to contact ECS; we are happy to help you navigate this process!
2015 Tax Due Dates:
August 31st –
Monthly Illinois wage report for July due (employers with 25 or more employees)
September 15th –
3rd estimated tax payments for 2015 due for Individuals and Corporations
Extended C and S – Corporation income tax returns due
Extended Partnership income tax returns due
September 30th –
Monthly Illinois wage report for August due (employers with 25 or more employees)
About The Author - John S. Hasmonek, joined ECS as a shareholder through our merger with Ronald J. Borden & Co., received his Bachelor of Science Degree in Accounting with Honors and Highest Distinction from the University of Illinois at Chicago, Illinois in 1976. Mr. Hasmonek is a Certified Public Accountant with over 38 years of accounting and tax experience. His areas of expertise include financial statement compilations, reviews and audits, ERISA audits, financial projections, business and personal tax preparation, management consulting, and personal and corporate tax planning.