Rejected - Identity Theft?

[Sparky]

I've been doing this a long time and had my first Identity compromise. ("Rejected - Return already received . . . ")
How common is this? Does it really take 10 - 14 months to resolve? (Clark Howard says so; and says 15 million fraudulent returns are filed each year.)

We are filing a paper return with forms 8948 and 14039.

Lost a half day dealing with this and feel awful for my long time client.

[S T]

This whole identity thing is becoming really scary!

I do not believe as professionals it is on our end

Something else going on as the Govt wanted us to do efile

So really how "secure" is this process! Where really are these "thieves" obtaining the ID numbers!

So far I have been lucky! AND my clients are trusting me to say that it is secure!

Sandy

[David1980]

Where really are these "thieves" obtaining the ID numbers!

Well, it could be through government security leaks (especially at the state and local level) but more likely it's not through the government at all. The young people would probably share their SSN on Facebook if it was in their profile. Lots of people lacking common sense there. The old people are easily manipulated. Then you have doctors offices, dentists, schools, banks, and so on. And us, of course. There's been break ins and computer theft from tax offices just to get that data. Employees that steal it. Bad preparers that may have acquired it legitimately one year and then continue to file returns in future years or sell the information on the internet. There's lots of ways that data is acquired.

[geekgirldany]

I have to agree it is getting bad. Georgia was listed as one of the states with the highest fraudulent returns.

My client last year that had an ID Theft on his return I found it interesting where it was filed. I will not go into great detail but when I got the return transcripts it listed a certain state, not Georgia. A relative of his spent a majority of time in that state the year the return was filed on. Coincidence? I do not know but seemed interesting to me.

[FEDUKE404]

Problems likely something other than efiling security

This whole identity thing is becoming really scary!

I do not believe as professionals it is on our end

Something else going on as the Govt wanted us to do efile

So really how "secure" is this process! Where really are these "thieves" obtaining the ID numbers!

So far I have been lucky! AND my clients are trusting me to say that it is secure!

Sandy

I have absolutely no problems telling my clients the efile submission process is secure. Trusted vendors, encryption, etc. pretty well take care of that specific risk.

The far, far greater risk is from those who have ACCESS to personal information. Not everyone is honest, especially in today's world where employees will change jobs with regularity. A nefarious person could be in a medical office, a school scenario, a relative/ex-spouse (!), and the list goes on.

Add to that risk the fact that many people are plain stupid. I had one client who was missing some information (needed neighbor's tax info as she provided dependent care) and I received an email response with full address, name, Soc Sec number, etc. With social media, it's not too difficult to find out who-lives-where, birthdays (!), names of children and their birthdays (!!), and the list goes on.

Common sense can solve a lot of these potential problems. Shred very sensitive paperwork. Junk mail stuff you automatically put into the recycle bin should at least first have your name/address removed from any actionable contents. (Here is the application for your new credit card -- sign here and drop it in the nearest mailbox -- envelope provided.) Just tear a small hole...the paper recycling machines will not be offended at all.

Do your checks (and do you still USE checks?!?) have your home address, telephone number, driver license number printed on them? DUH !! And when you mail payments to ABC Credit Card Company or XYZ Mortgage Company, do you leave them in your streetside mailbox for pickup (by whom?) or more logically drop them into a secure mailbox or postal facility?

The list goes on. But I don't think there is a meaningful risk merely due to electronic filing.

Just my opinion. And you know what they say about such. . .

FE

[Roberts]

I have had one client that this has occurred with. We paper filed and nothing else impacted the client.

My brother had his ID stolen - massive headache that took 2 years to clear up. Thankfully he never needed to take out a loan or anything but if he had, would have been trouble.

[Y2KEA]

Prosecutors: Fraudsters filed fake tax return as Eric Holder

Two Georgia men filed a tax return with the name, birthday and social security number of Attorney General Eric Holder in hopes of getting his refund, according to federal prosecutors in Atlanta. Mr. Holder was one of several people targeted by Yafait Tadesse and Eyaso Abebe, both of whom have pleaded guilty to charges related to the scheme.

More here: http://finance.yahoo.com/news/prosec...185955824.html

[mastertaxguy]

Id theft issues

There have been several ID theft-type threads this year. Here was my post to an earlier one.

Anyone have (or had) clients/taxpayers who have received a letter (LTR 4464C) from IRS (Austin Center?) concerning their tax return being pulled for review BEFORE THEY FILED THEIR 2013 TAX RETURN?

Office I am at this year has had 5 "alleged" ID theft situations (about 1% of all returns to date). Latest was a couple whose 2013 taxes were done on a Friday, transmitted and rejected on the next day (Saturday), and on following Monday they (he actually) received a letter from IRS (Austin) listed as letter LTR 4464C and dated 3 days before their appointment with us. Letter says their return is getting a "thorough review of your return information. This review is part of an ongoing program the IRS conducts to ensure the accuracy of return information." Letter was mailed to their home. Letter does not include a copy of the return or indicate a filing status, and no such letter was sent to the wife ("traditional marriage"). Letter goes on to list 4 items being reviewed. A fair conclusion is that someone filed a return in H's name with some schedule C items and/or high withholding. This appears to be an ID Theft issue.

(Yes, ID Theft Affidavit form 14039 was prepared and filed with paper copy of return mailed to the applicable processing center; also 14039 for the wife).

Curious to know if others have had clients with simliar letters. I know there are IRS agents/RO's/etc reading this forum, and hope thay might break tradition and actually respond with some useful information on this.

BTW, we also have had two different clients, one new, one returning, with altered W-2's: B copy withholding was altered but not the other copies (1, 2, C etc). One was an ADP prepared W-2, other prepared by the employer (legit employers both). Last edited by mastertaxguy; 03-06-2014 at 10:20 AM.

[taxmandan]

Had one client last year affected by a fraudulent return, looks like two this year just had one rejected last night but a new client and I'm not sure she or BF hadn't tried to file online and maybe did so without realizing it.

>The young people would probably share their SSN on Facebook if it was in their profile. Lots of people lacking common sense there.

No kidding, one of my elderly clients had to change her bank account after her granddaughter put a picture of client's birthday check to her on Facebook, account #, address, and everything for all the world to see!

[David1980]

There's also the issue of people filing fraudulent tax returns (with their own SSN, not identity theft) and then when they get the IRS letter claiming "Oh, that wasn't me!" I'd bet the general tax fraud is increasing just as fast as identity theft - at least in certain parts of the country and for certain types of taxpayers. But a lot of it will probably get labeled identity theft as well.

I really wish congress would eliminate refundable tax credits. Makes no sense to me someone can file a return with a bunch of nephews/nieces with ITINs and get so much money back when they haven't paid in a dime.

[FEDUKE404]

Fighting the fraud battle

There's also the issue of people filing fraudulent tax returns (with their own SSN, not identity theft) and then when they get the IRS letter claiming "Oh, that wasn't me!" I'd bet the general tax fraud is increasing just as fast as identity theft - at least in certain parts of the country and for certain types of taxpayers. But a lot of it will probably get labeled identity theft as well.

I really wish congress would eliminate refundable tax credits. Makes no sense to me someone can file a return with a bunch of nephews/nieces with ITINs and get so much money back when they haven't paid in a dime.

Reminds me of the good ole days when a large number of those "refundable credit returns" had a foster child (old rules = child is breathing and has a Soc Sec number available) on the list. Social Security numbers were passed around like there was no tomorrow..."you need another one??"

Congress will not do a doggone thing to resolve the matter....except maybe put more restrictions/forms on us. It just is not politically correct for them to offend their base.

FE

[nwtaxlady]

Yes, fraudulent returns.

Just think.... what the impact would be if they took away the EITC and the refundable child tax credit. I bet there is a very STRONG correlation between the refundable credits such as EITC and the Child Tax Credit and fraudulent returns using someone else's social security number. In my opinion they should do away with the EITC! All it does is create problems and IRS has us professionals "policing" the taxpayers when they do nothing about a self prepared tax return. OH DON'T GET ME STARTED!


I have had 2 clients this year where their Federal Return has been rejected due to another return having the same social security number for the Taxpayer (not a dependent). In both cases I have e-filed their State Return and they were both accepted. This tells me that the other person is not in the same State OR they are only filing the Federal return fraudulently for the BIG EIC credit!

Again, the EITC needs to GO AWAY!

[MDEA]

REJECTED iDENTITY THEFT

And what would you put in its place? It would cost the government much more to have any other program to give money to the working poor. I do over 1000 EITC returns we have learned after 3 audits what is needed to pass an audit. We have lost over 600 clients because of the new rules but I can sleep at night.

[FEDUKE404]

No one cares to deal with the obvious problem

Just think.... what the impact would be if they took away the EITC and the refundable child tax credit. I bet there is a very STRONG correlation between the refundable credits such as EITC and the Child Tax Credit and fraudulent returns using someone else's social security number. In my opinion they should do away with the EITC! All it does is create problems and IRS has us professionals "policing" the taxpayers when they do nothing about a self prepared tax return. OH DON'T GET ME STARTED!


I have had 2 clients this year where their Federal Return has been rejected due to another return having the same social security number for the Taxpayer (not a dependent). In both cases I have e-filed their State Return and they were both accepted. This tells me that the other person is not in the same State OR they are only filing the Federal return fraudulently for the BIG EIC credit!

Again, the EITC needs to GO AWAY!

Agreed.

Had my first reject of the season. Not the primary, not the dependent, but the spouse's SSN was used "as a secondary SSN on another return." This was a prior client, so all info from 2012 tax returns was correct/carried over by software to the 2013 tax returns.

The government just hands out money, and it really does not seem to care.

As for MDEA, good for him/her. I'm not sure "the audits" are the problem...more the nature of risk exposure and/or I just no longer need those client headaches. I worked in recent years with a well-known national firm whose bread and butter was EITC returns, especially in late January and early February. I do not miss in any way, shape, or form the headaches (and constant lying!!) that accompanied the bulk of such returns.

Different strokes for different folks, I guess!

FE

[David1980]

And what would you put in its place? It would cost the government much more to have any other program to give money to the working poor. I do over 1000 EITC returns we have learned after 3 audits what is needed to pass an audit. We have lost over 600 clients because of the new rules but I can sleep at night.

I'm not convinced it would cost the government much more. How you provide welfare does have an impact on how much fraud it has. Cash is the worst way to provide welfare if you're trying to discourage fraud. Providing things, especially things that can't be easily transferred discourages fraud. Let's say we want welfare for families to help pay their education. Right now we have basically grants/scholarships that are paid directly to the school and tax credits on the tax return that give cash to the taxpayer. Anyone care to guess which of those has the higher fraud rate? When the money goes directly to the school the fraud is reduced vs. when we give cash to a taxpayer who maybe has school expenses and maybe does not. Sure, someone could still lie about income in order to get grants for school expenses, at least the money is going to a school. Versus the money paying someone's car payment and home furnishings for someone with no school expenses and no intention of ever having any school expenses.