ProSeries 2015 dirvers license info

[taxmandan]

I think the W-2 verification codes and the DL information without tracking the verification back to anything is just a bunch of silly extra data entry.

I don't think any professional software will allow a person to put through a return without a valid EFIN, so because it can be tracked back to the preparer, I doubt many if any of the fraudulent returns are coming from people like us.

From my understanding the vast majority is coming from on-line services such as TurboTax and bank product companies. Put the responsibility on them to know the customers they are dealing with or receive a fine and leave the rest of us alone from mandates. If a company knows they will be fined for letting through a fraudulent return you can be sure they will come up with a way to prevent it and most likely it will be more effective than anything Internal Revenue Service comes up with.

One of the important takeaways from the meeting was that we need to monitor our EFIN filing records. The thieves are using real EFINs to efile and EROs need to frequently check their numbers with theIRS. If you have filed 200 returns to date and your ERO record shows 950 returns, your EFIN is compromised and being used by thieves. TheIRS says to notify them immediately and they can suspend your EFIN and issue you a new number to use right away. Hopefully the software companies are prepared to change EFINs quickly so there isn't much delay for us to continue filing.

I do support the idea of the W-2 code and participation of the payroll companies to file the W-2 with theIRS so verification can be done before refunds are issued. Refunds should not be issued until the income and withholding has been verified by theIRS. That's where they need to focus efforts to prevent fraud. Be proactive, not reactive and we can beat this thing.

[FEDUKE404]

Source of problem returns

. . .
From my understanding the vast majority is coming from on-line services such as TurboTax and bank product companies. Put the responsibility on them to know the customers they are dealing with or receive a fine and leave the rest of us alone from mandates. If a company knows they will be fined for letting through a fraudulent return you can be sure they will come up with a way to prevent it and most likely it will be more effective than anything Internal Revenue Service comes up with.

Agree on that! Too bad the folks at the IRS didn't follow your logic before coming up with Form 8867 and related issues.

OTOH, I don't miss preparing EITC returns one bit! Block, JH, Liberty et al are more than welcome to that market.

FE

[kathyc2]

I think the W-2 verification codes and the DL information without tracking the verification back to anything is just a bunch of silly extra data entry.

I don't think any professional software will allow a person to put through a return without a valid EFIN, so because it can be tracked back to the preparer, I doubt many if any of the fraudulent returns are coming from people like us.

From my understanding the vast majority is coming from on-line services such as TurboTax and bank product companies. Put the responsibility on them to know the customers they are dealing with or receive a fine and leave the rest of us alone from mandates. If a company knows they will be fined for letting through a fraudulent return you can be sure they will come up with a way to prevent it and most likely it will be more effective than anything Internal Revenue Service comes up with.

[TAXNJ]

Now

Let me guess. . .

You charge extra to obtain RTN / DAN for direct deposit of refunds ? (Doubt if you even bother with direct debits.)

You charge extra to enter PIN that IRS has provided to taxpayer ?

You charge extra to change a mail address, or a daytime contact telephone number (or is that just left blank) ?

You charge extra to change last name of someone with recent marriage / divorce ?

Reminds me of my lawyer. . . .

BTW: As for "worry" about client with a balance due return, did it ever occur to you that part of the problem is someone (else) is frequently filing refund returns before a legitimate state return is ever filed?

My sole exposure to this issue is preparation of Virginia resident returns. I ask for last five digits of VA drivers license as requested. I think it's an excellent "easy" step to prevent potential client problems. It takes less keystrokes than entering bank refund information. And. . .I do it for gratis !!

Different strokes for different folks, I guess.

FE

Now let's be fair. Everyone's fees are different in the free market place and the consumer has the right to choose. Right now this issue is "optional" for one to decide if to include, but it is good practice to verify and/or copy/scan a clients ID.

Wonder why you are using an expensive lawyer and if that lawyer is spending that extra money on something fun on a Sunday or deciding if a driver ID goes on a tax return?

[FEDUKE404]

Mountains from molehills cont'd

The previous commenter was correct, an ID value that one can't change (SSN, DL, DOB, etc) is never a good security secret. Haven't we learned anything from the problem of using SSNs? Asking for DL and issue date is meaningless busywork, I'm not doing it for free.

Second, what about the large class of taxpayers who report a balance due? Are we really worried about fraud on their part? Why should they have to provide any ID info at all? (Of course, it's possible someone could fraudulently target a taxpayer by filing a huge balance due return, so that the target gets harassed by the IRS collection process until they get the correct return filed instead).

Let me guess. . .

You charge extra to obtain RTN / DAN for direct deposit of refunds ? (Doubt if you even bother with direct debits.)

You charge extra to enter PIN that IRS has provided to taxpayer ?

You charge extra to change a mail address, or a daytime contact telephone number (or is that just left blank) ?

You charge extra to change last name of someone with recent marriage / divorce ?

Reminds me of my lawyer. . . .

BTW: As for "worry" about client with a balance due return, did it ever occur to you that part of the problem is someone (else) is frequently filing refund returns before a legitimate state return is ever filed?

My sole exposure to this issue is preparation of Virginia resident returns. I ask for last five digits of VA drivers license as requested. I think it's an excellent "easy" step to prevent potential client problems. It takes less keystrokes than entering bank refund information. And. . .I do it for gratis !!

Different strokes for different folks, I guess.

FE

[Rapid Robert]

static ID numbers + balance due ID fraud?

The previous commenter was correct, an ID value that one can't change (SSN, DL, DOB, etc) is never a good security secret. Haven't we learned anything from the problem of using SSNs? Asking for DL and issue date is meaningless busywork, I'm not doing it for free.

Second, what about the large class of taxpayers who report a balance due? Are we really worried about fraud on their part? Why should they have to provide any ID info at all? (Of course, it's possible someone could fraudulently target a taxpayer by filing a huge balance due return, so that the target gets harassed by the IRS collection process until they get the correct return filed instead).

[David1980]

The negative response was due to the many complications that will arise: the intent is to compare the information this tax season with the info input next year, if it's not the same then there will be a delay in processing the return. If someone has a license from another state can they expect delays? The rep couldn't answer questions about whether someone with a DL from a different state but files a resident return will be a problem this year. Some filers do not have either a DL or state ID, what will they do? Is an expired ID or DL acceptable? In Oregon, Revenue is not going to verify the number with DMV, so anything input will fly.

Obviously would vary from state to state. One state might think someone who's been filing resident returns for 5 years and entered an out of state DL is suspicious. Another state might not. I think the smart thing for the states to do would be to test that sort of theory this year. Collect that sort of data and then after season see if the theories hold true with the reported identity thefts or the detected identity thefts using other means of detection. It might very well make sense to flag returns from multiple year residents that haven't filed a change of address that are using out of state ID.

since the DL number is a static number that the ID thieves already have,

I think that assumption might be a little presumptuous. Especially since they also would need the issue date. How does identity get compromised? There's a lot of ways. Personally I've been offered free identity monitoring services as a result of two different breaches. One from a large retailer. The other through a health insurance company. In neither case would my driver's license information have been contained in that data because neither the retailer nor the insurance company had my driver's license number. If someone files a return for me using information obtained from either of those breaches validating a driver's license number would stop that fraudulent return.

Obviously some people who are victims of identity theft do in fact have their driver's license numbers included in the stolen data. For example if someone mugged me they'd get my driver's license with my wallet. Someone might even carry a social security card and give the mugger everything needed.

So there's basically scenarios where a thief has the social security number, the driver's license ID, or both. I would bet in most cases they do not have both however, in which case including driver's license number in return data might do a lot to cut down on identity theft. It all depends on the nature of how that identity was compromised.

[taxmandan]

The negative response was due to the many complications that will arise: the intent is to compare the information this tax season with the info input next year, if it's not the same then there will be a delay in processing the return. If someone has a license from another state can they expect delays? The rep couldn't answer questions about whether someone with a DL from a different state but files a resident return will be a problem this year. Some filers do not have either a DL or state ID, what will they do? Is an expired ID or DL acceptable? In Oregon, Revenue is not going to verify the number with DMV, so anything input will fly.

Basically the feeling of practitioners is this will become as problematic as the due diligence for EITC or determining dependent status, and since the DL number is a static number that the ID thieves already have, it won't deter them much at all. DL numbers were compromised years ago, so it's not a secure method of verifying identity. Until a few years ago Oregon would sell a complete list of licensed drivers to anyone who paid the $15 fee. Businesses can still get that if they can show a bonafide business need, think insurance companies, actuaries, lenders, marketing companies. Don't think that info isn't already on the internet.

[David1980]

I attended a meeting with the Oregon Dept of Revenue today for updates on next filing season. This was a HOT topic of discussion, DOR explained it thus:

TheIRS, state tax agencies and tax software companies formed study groups this past spring to address the ID theft/fraudulent tax return problem. After spending thousands of tax dollars so federal bureaucrats, state bureaucrats and IT geeks could hash this problem out, the best they could come up with is to have filers include their driver's license number and issue date when filing a tax return. IT IS NOT MANDATORY BY IRS, OR OREGON. I don't know if other states are going to mandate this information, I got the impression that it won't be required but encouraged. It is a pilot program to see if it will reduce fraud. Based on the overwhelming negative response from practitioners I would guess this isn't going to get much traction in tax offices.

Oregon DOR seemed surprised at all the questions that they couldn't answer about specifics on this topic. As usual they thought it was obvious to everyone that this will effectively reduce fraud in tax filings. Maybe including tax practitioners in that type of conversation would bring some real world reality to the table.

I have to wonder if the overwhelming negative response was really over Oregon wanting the driver's license or state ID, or the lack of information about it previously.

Personally I don't see entering a driver's license number in my software to be a big deal. And I do see how it can help with identity theft. But this is the sort of thing we should be hearing about from the IRS and/or the states, not someone's observation of a new field in the tax software like happened here. Whoever it is that is requesting this should be advising the tax preparation community. A page on their website or something to that nature - like the IRS did with the 16-digit W-2 validation codes. Ideally early enough that organizers and the such can be updated.

[TAXNJ]

Yep

I believe it is a good practice to scan the Govt. issued picture ID of any new client. Last tax season the boy friend of a client had an outstanding warrant (found out later) and he refused to give me any ID. Got upset when I insisted so I told him to go somewhere else. The girl friend kept on calling me to do his return.

Medical offices, hospitals, etc are requiring the ID. Therefore no reason for tax preparers to not ask for it plus look at the ERO efiling requirements and/or suggestions.

[ATSMAN]

I believe it is a good practice to scan the Govt. issued picture ID of any new client. Last tax season the boy friend of a client had an outstanding warrant (found out later) and he refused to give me any ID. Got upset when I insisted so I told him to go somewhere else. The girl friend kept on calling me to do his return.

[August @ ADG Financial]

The Problem...

I guess the problem with this is it's going to cause extra work. Many times one spouse comes in and I'm sure they won't have the driver license of the other spouse. So I'm going to do it but it means that when the they call for the appointment I'll have tell them to get their spouse's driver license. We do about 600 return and last year we had 4 ID thief's. If I can cut that down it would be great. It's just extra work. Thanks for checking with your group.

[FEDUKE404]

Why against extra security?

. . .Based on the overwhelming negative response from practitioners I would guess this isn't going to get much traction in tax offices. . .

Can you expand on the reasons for the negativism??

From my perspective, I would think such a simple action might be beneficial in the reduction of fraudulently filed income tax returns, especially at the state level.

Simply obtaining/entering the last five digits of a client's drivers license number seems a reasonably simple action to take for some added security. (OK, slightly more effort if an issue date is also needed. )

So, what am I missing here? ? ?

FE

[taxmandan]

Oregon practitioner meeting today

I attended a meeting with the Oregon Dept of Revenue today for updates on next filing season. This was a HOT topic of discussion, DOR explained it thus:

TheIRS, state tax agencies and tax software companies formed study groups this past spring to address the ID theft/fraudulent tax return problem. After spending thousands of tax dollars so federal bureaucrats, state bureaucrats and IT geeks could hash this problem out, the best they could come up with is to have filers include their driver's license number and issue date when filing a tax return. IT IS NOT MANDATORY BY IRS, OR OREGON. I don't know if other states are going to mandate this information, I got the impression that it won't be required but encouraged. It is a pilot program to see if it will reduce fraud. Based on the overwhelming negative response from practitioners I would guess this isn't going to get much traction in tax offices.

Oregon DOR seemed surprised at all the questions that they couldn't answer about specifics on this topic. As usual they thought it was obvious to everyone that this will effectively reduce fraud in tax filings. Maybe including tax practitioners in that type of conversation would bring some real world reality to the table.

[FEDUKE404]

VA information shown

It's on the VA form, but I never put that information in last year and it did not affect the processing of any tax returns.

True, but I think the intent of the VA Dept of Rev was to use that additional information as a possible tie-breaker in case a fraudulent VA income tax was filed. I have not yet reviewed what the 2015 VA instructions state.

I used it on all of my 2014 VA tax returns. It took minimal effort on my part to get the five digits from each client. Whether doing so did or did not "affect the processing of any tax tax returns" will likely remain unknown. Personally, I think it is an excellent idea and when I explained the rationale to my VA clients, they concurred.

FE