Efile rejects

[manyhappyreturns]

I am having an extraordinary number of rejected tax returns this year due to reject code 902, which is "SSN of primary taxpayer already used on a previously accepted return." All six of the rejects I have had are previous clients whose SSN#s are correct on the return, so somebody got hold of their info and is filing fraudulent returns using their names and SSN#s. Needless to say, I am freaking out. I don't know where the security breech is and I'm not getting any help from the IRS on this. They say the average of returns being filed by hijacked SSN#s is about 1%, but I'm a small office in a small town and I've only filed 30 returns so far, so my average is 20%. It seems like this should be investigated in order to prevent further damage (although I realize that a lot of the damage is already done and I won't know about it till after I file my clients who haven't come in yet).

Is anybody else having trouble like this? It seems too high a ratio to be "just the way it is" which is what my software company and the IRS are telling me.

[ATSMAN]

What software are you using to Efile?

If it is Drake you may be accidentally submitting the e-file twice. If you open the return after submitting an e-file and then close it back it will create another e-file in the background and when you go to submit your next e-files it will get added to the batch.

When you are ready to transmit your e-file select the review button to see which clients are being e-filed.

[ChEAr$]

Now I hate to mention this, but if in a previous year your trash contained papers which had such info on them, it might have been a trash thief getting into your very own trash. Of course some practitioners routinely shred all such private information, but what comes to mind is a one the local police were called by a concerned citizen to a business garbage bin which had a bocoup of taxpayer ID #'s which had been compromised when a thief was dumpster diving. I hope that's not your case.

[manyhappyreturns]

Good suggestions, but neither are the problem. Yes, I have Drake, but these 6 returns were rejected 1st try. They have all reported the incident to the IRS Identity Theft Unit and were told that tax returns with large refunds were filed previously in their names & SSNs. Of the 6, the biggest refund they were supposed to be getting was $369, and the bogus returns had refunds that were thousands of dollars. So it's definitely the work of crooks.

The trash thief thing couldn't have happened either. I have a shredder that really chews things up and I take my garbage home where it gets mixed into the kitchen garbage and on to the dump.

Last fall somebody got hold of my EFIN and filed about 100 bogus returns without me being aware of it till I checked my e-file database on the Drake website in January as I prepared for the tax season. I got my EFIN deactivated and got a new one, then tried to report the bogus returns to the IRS, but they didn't want the info. That was rather surprising, but they confirmed when I asked them again that they really had no use for that info. They told me there was no way that the person who used my EFIN could have access to my clients' personal info or mine, but now I'm really starting to wonder.

The other thing I'm wondering is why all these bogus returns were listed in my Drake e-file database. Wouldn't that mean whoever filed them did so through Drake? Could this have been a Drake employee who filed all those returns? My computer is password protected and also locked up at night and my laptop has never been in anyone else's hands. It also could be the work of an IRS employee. I just saw on yahoo the story of an IRS employee that was convicted of tax fraud and identity theft. Nothing is safe ANYWHERE!

[David1980]

The other thing I'm wondering is why all these bogus returns were listed in my Drake e-file database. Wouldn't that mean whoever filed them did so through Drake? Could this have been a Drake employee who filed all those returns? My computer is password protected and also locked up at night and my laptop has never been in anyone else's hands. It also could be the work of an IRS employee. I just saw on yahoo the story of an IRS employee that was convicted of tax fraud and identity theft. Nothing is safe ANYWHERE!

IP address is included in MEF transmissions meaning should the IRS have the resources to investigate those 100 returns filed through your Drake account they could tell what IP address originated them. I would agree with your conclusion, that they were filed through Drake (or else they shouldn't show up in your Drake e-file database). The same thing could explain how your legitimate returns were stolen. Whoever obtained your Drake info could see your returns the same way you saw the fraudulent ones they filed through your account.

One of your employees? A stolen computer? Some kind of virus that sent your info away? Phishing? Lots of possibilities. Probably makes sense to change passwords and make sure your computer is updated and has anti virus and such.

[ATSMAN]

Good suggestions, but neither are the problem. Yes, I have Drake, but these 6 returns were rejected 1st try. They have all reported the incident to the IRS Identity Theft Unit and were told that tax returns with large refunds were filed previously in their names & SSNs. Of the 6, the biggest refund they were supposed to be getting was $369, and the bogus returns had refunds that were thousands of dollars. So it's definitely the work of crooks.

The trash thief thing couldn't have happened either. I have a shredder that really chews things up and I take my garbage home where it gets mixed into the kitchen garbage and on to the dump.

Last fall somebody got hold of my EFIN and filed about 100 bogus returns without me being aware of it till I checked my e-file database on the Drake website in January as I prepared for the tax season. I got my EFIN deactivated and got a new one, then tried to report the bogus returns to the IRS, but they didn't want the info. That was rather surprising, but they confirmed when I asked them again that they really had no use for that info. They told me there was no way that the person who used my EFIN could have access to my clients' personal info or mine, but now I'm really starting to wonder.

The other thing I'm wondering is why all these bogus returns were listed in my Drake e-file database. Wouldn't that mean whoever filed them did so through Drake? Could this have been a Drake employee who filed all those returns? My computer is password protected and also locked up at night and my laptop has never been in anyone else's hands. It also could be the work of an IRS employee. I just saw on yahoo the story of an IRS employee that was convicted of tax fraud and identity theft. Nothing is safe ANYWHERE!

This year Drake required all tax preparers who use Drake to prove their EFIN by submitting the EFIN account statement or EFIN letter. So I doubt it is another preparer.

Please call Drake support ASAP and have them look at each of the return's in question particularly the SID and if it was filed through Drake they will be able to determine who did it.

I still say that it may be duplicate e-files, because that happened to me at the beginning of the season till I figured out what was going on.

You can also run a report on the online Drake EF database and see the details of the Rejects.

[Koss]

Identity Theft?

Despite your assurances, I agree with ATS MAN that you may be dealing with duplicate returns that were accidentally filed by Drake Software.

As he suggested, you should log into the Drake support panel--on the web, in your browser, not in the Drake program--and look up each return.

If you are absolutely certain that these are genuine cases of identity theft, then I think it is very likely related to the fraudulent use of your EFIN last year.

If I were in your shoes, and the IRS refused to actively work with me to investigate this whole mess, to determine if there is a connection, then I would be calling a dozen other federal and state agencies, and screaming for help. I'm not kidding, and I'm not exaggerating. Even if there were NO cases of identity theft, the improper use of your EFIN warrants a real investigation. The identify theft takes the matter to a whole new level.

I would call the Treasury Inspector General for Tax Administration (TIGTA), your state attorney general's office, the office of the US Attorney, the FBI, and your congressman and senator. And then I would go to the national media. No joke. The IRS says they're taking identity theft seriously, but when they have a clear pattern of fraud staring them in the face, they don't want to act on it. I would blow this thing wide open.

After you make sure that it's not Drake filing duplicate returns. [LMAO]

There is one other possibility that you should consider...

If it's real identity theft, the affair with your EFIN might just be a bizarre coincidence that has nothing to do with it.

You're in a small town. Maybe the breach is local, and has nothing to do with you, or that guy who used your EFIN.

I'm not exactly recommending that you conduct your own investigation. But just how small is your town?

What do these people have in common? Do they all use the same bank? Maybe it's a bank employee. Do they all have kids at the same day care facility? Are they all recent customers of the same rent-to-own outfit?

Instead of the FBI and the US Attorney, maybe you should start with your local police department...

BMK

[oceanlovin'ea]

I have nothing to add. I would be in a PANIC!!!!! if that happened to me.

I really appreciate your post, Burton. You just lay it all out there. Here are all the people to contact. Contact all of them.
So glad you are on this board.

Manyhappyreturns, if it were me before I transmitted any more returns, I would want to see if I could find out what is going on. Some of your clients might not like that but if it means that their identity is safe they should be happy that you are checking this all out.
Please keep us informed of what you find out and where the problems came in. That will help all of us down the road.

Linda, EA

[ATSMAN]

Think about this logically. The ID thief steals the EFIN of the preparer and files through the same transmitter? They would need to have an account with the transmitter to be able to use that EFIN to e-file. The finger prints are all over the place to track it down.

I would be very surprised if at the end this was truly a EFIN hijack by another preparer with a separate account with Drake with same EFIN?

[manyhappyreturns]

Thanks everybody for all your suggestions. After my last couple of rejects I was sure this is not coincidence even though I kept being told that it was. I also kept being told there was nothing that could be done other than have my clients report the incident to the IRS and file the affidavit and paper return call the credit bureaus, etc., and wait 180 days for a possible resolution. THIS IS NOT ACCEPTABLE TO ME! I can't keep filing returns wondering how many are going to be rejected. And no, this is not a case of me e-filing the same return twice. These returns were filed and accepted before I even saw the clients.

So, I called Drake support again, and made a big stink. Finally the person I talked to agreed with me that this is a serious issue and he took my story to the higher ups and they are supposed to call me tomorrow. If I don't hear from them by mid-morning, I will call them again.

By filing returns, I am not putting anyone in anymore danger than they are already in. Filing them just lets us all know whether they are already victims. It bothers me that my clients who haven't come in yet don't have a clue about what's happening, and I don't want to scare them, but so far 4 out of 5 have been accepted, so it seems fruitless to scare them all. I think the crooks are just going for tax refunds, not all the other ID theft stuff, because none of my client victims so far have had any unusual activity in other areas like credit cards or banks or their credit ratings. But I can't be sure of that. I might be a victim, too, but I don't have time to do my own tax return and I'm not really worried about that. Getting to the root of the matter is a much more pressing issue for me now.

[joanmcq]

Are there extra returns in THIS years Drake file they keep of all returns transmitted under your EFIN? If your EFIN was stolen last year and the EFIN theif could indeed see all of YOUR last years transmitted returns, this would be an easy breach to get your data. This year the theif wouldn't have to use Drake, they could have used a copy of turbo tax with the data to create bogus returns.

If the Drake breach is just a coincidence, having the police & FBI looking for a common thread between your clients is the way to find where the data breach was. I've read about ID thieves getting info from doctors office employees, etc. anywhere an SSN & name/address is commonly found. You do need to get the police involved. And FBI since this is a federal crime.

[geekgirldany]

Let us know what Drake has to say. To see the list in your EFIN database on their site last year.... something is going on.

If it is a virus, it would have to be some kind key capture or maybe even remote because they would need your Drake EFIN, Customer Number, and Password to efile through the Drake software. So somehow these things were compromised. Drake really needs to setup and look into this. Should have looked into it last year when it happened.

[FEDUKE404]

Fraud issue worth a mention

Several years ago I had an issue where a client could not (easily) efile his returns because the SSN of one of the dependent children had been used previously. Due to the complexity of his return, and the need to wait for tax documents to arrive, his return was rarely filed prior to April 1.

We endured this event for several years. The client escalated his responses which ranged from "OK I'll let the IRS know....we'll see what happens next year" to, after several years running, a full fledged "---can't be repeated here---" but the IRS basically was giving him the cold shoulder. This would include contact with their fraud unit (in CA?). Finally a letter to his congressman got things moving, in year #5 IIRC. He started getting some contact from "independent" government folks who looked into such tax problems and apparently had (somewhat) limited access to privileged IRS information.

Now for the point of this story: After a thorough review, this representative said the IRS records showed multiple submissions by my software provider...possibly a problem with them (or me!) and having access to prior year efiling "information." Client passed that information to me, and I relayed it to my software provider. Shall we say that is when the stuff hit the aerator?!? The software provider vehemently denied any such possibility, putting it very mildly. My own conscience was quite clean on the matter.

So, to the conclusion: Late one Friday afternoon I received a call from an IRS person (TX?) who said he had been working on the issues, was aware of the problems, could only speak in generalities....but neither I nor my software provider was at fault. The "bad" returns had been filed by someone within a big-name commercial firm, somewhere in the southeast. It seems a higher up with the tax software provider knew someone higher up with the IRS and....not taking said accusations well....the fur flew. Oh, to be a fly on that wall!

To this day neither the client nor I received any official response from the IRS or from their fraud unit. A reasonable conclusion is the dependent's tax information was "gathered" somewhere locally...school, doctor, who knows?? and then used or sold to others. For the last couple of years we have held our breath upon efiling, and at least we're on a short roll for recently encountering no such problems.

Whether this tale is relevant to the topic of this post is unknown, but that's just "my story."

First morning coffee is about gone and now time for work.

FE

[manyhappyreturns]

Just wrote a long reply and then when I tried to post it I was already logged out due to the time it took, and the message got lost in the shuffle. Now I don't have anymore time to respond. I'M SO FRUSTRATED!!!!!!!!!! If any of you on the forum are praying Christians, please pray for me. I am a basket case!

[Koss]

Rejects

@manyhappyreturns--

If and when you have time, feel free to shoot me an e-mail. I would be glad to discuss this with you offline, either bv e-mail or by telephone, and offer a couple of suggestions.

BMK