IRS
unveils new People First Initiative; COVID-19 effort temporarily adjusts,
suspends key compliance programs - IRS Newswire IR-2020-59
WASHINGTON – To help people facing the challenges of COVID-19 issues, the
Internal Revenue Service announced today a sweeping series of steps to assist
taxpayers by providing relief on a variety of issues ranging from easing
payment guidelines to postponing compliance actions.
“The IRS is taking extraordinary steps to help the people of our country,”
said IRS Commissioner Chuck Rettig. “In addition to extending tax deadlines and
working on new legislation, the IRS is pursuing unprecedented actions to ease
the burden on people facing tax issues. During this difficult time, we want
people working together, focused on their well-being, helping each other and
others less fortunate.”
“The new IRS People First Initiative provides immediate relief to help
people facing uncertainty over taxes,” Rettig added “We are temporarily
adjusting our processes to help people and businesses during these uncertain
times. We are facing this together, and we want to be part of the solution to
improve the lives of all people in our country.”
These new changes include issues ranging from postponing certain payments
related to Installment Agreements and Offers in Compromise to collection and
limiting certain enforcement actions. The IRS will be temporarily modifying the
following activities as soon as possible; the projected start date will be
April 1 and the effort will initially run through July 15. During this period,
to the maximum extent possible, the IRS will avoid in-person contacts. However,
the IRS will continue to take steps where necessary to protect all applicable
statutes of limitations.
“IRS employees care about our people and our country, and they have a strong
desire to help improve this situation,” Rettig said. “These new actions reflect
just one of many ways our employees are working hard every day to assist the
nation. We care, a lot. IRS employees are actively engaged, and they have
always delivered for their communities and our country. The People First
Initiative is designed to help people take care of themselves and is a key part
of our ongoing response to the coronavirus effort.”
More specifics about the implementation of these provisions will be shared
soon. Highlights of the key actions in the IRS People First Initiative include: Existing Installment
Agreements – For taxpayers under an existing Installment
Agreement, payments due between April 1 and July 15, 2020 are suspended.
Taxpayers who are currently unable to comply with the terms of an Installment
Payment Agreement, including a Direct Deposit Installment Agreement, may
suspend payments during this period if they prefer. Furthermore, the IRS will
not default any Installment Agreements during this period. By law,
interest will continue to accrue on any unpaid balances. New Installment
Agreements – The IRS reminds people unable to fully pay their
federal taxes that they can resolve outstanding liabilities by entering into a
monthly payment agreement with the IRS. See IRS.gov for further information. Offers in Compromise
(OIC) – The IRS is taking several steps to assist taxpayers in
various stages of the OIC process:
Pending
OIC applications
– The IRS will allow taxpayers until July 15 to provide requested
additional information to support a pending OIC. In addition, the IRS will
not close any pending OIC request before July 15, 2020, without the
taxpayer’s consent.
OIC
Payments
– Taxpayers have the option of suspending all payments on accepted OICs
until July 15, 2020, although by law interest will continue to accrue on
any unpaid balances.
Delinquent
Return Filings
- The IRS will not default an OIC for those taxpayers who are delinquent
in filing their tax return for tax year 2018. However, taxpayers should
file any delinquent 2018 return (and their 2019 return) on or before July
15, 2020.
New
OIC Applications
– The IRS reminds people facing a liability exceeding their net worth that
the OIC process is designed to resolve outstanding tax liabilities by providing
a “Fresh Start.” Further information is available at IRS.gov
Non-Filers
–The IRS reminds people who have not filed their return for tax years before
2019 that they should file their delinquent returns. More than 1 million
households that haven’t filed tax returns during the last three years are
actually owed refunds; they still have time to claim these refunds. Many should
consider contacting a tax professional to consider various available options
since the time to receive such refunds is limited by statute. Once delinquent
returns have been filed, taxpayers with a tax liability should consider taking
the opportunity to resolve any outstanding liabilities by entering into an
Installment Agreement or an Offer in Compromise with the IRS to obtain a “Fresh
Start.” See IRS.gov for further information. Field Collection
Activities - Liens and levies (including any seizures of a
personal residence) initiated by field revenue officers will be suspended
during this period. However, field revenue officers will continue to pursue
high-income non-filers and perform other similar activities where warranted. Automated Liens and
Levies – New automatic, systemic liens and levies will be
suspended during this period. Passport
Certifications to the State Department – IRS will suspend new
certifications to the Department of State for taxpayers who are “seriously
delinquent” during this period. These taxpayers are encouraged to submit a
request for an Installment Agreement or, if applicable, an OIC during this
period. Certification prevents taxpayers from receiving or renewing passports. Private Debt
Collection – New delinquent accounts will not be forwarded by
the IRS to private collection agencies to work during this period. Field, Office and
Correspondence Audits – During this period, the IRS will
generally not start new field, office and correspondence examinations. We will
continue to work refund claims where possible, without in-person contact.
However, the IRS may start new examinations where deemed necessary to protect
the government’s interest in preserving the applicable statute of limitations.
In-Person
Meetings
- In-person meetings regarding current field, office and correspondence
examinations will be suspended. Even though IRS examiners will not hold
in-person meetings, they will continue their examinations remotely, where
possible. To facilitate the progress of open examinations, taxpayers are
encouraged to respond to any requests for information they already have
received - or may receive - on all examination activity during this period
if they are able to do so.
Unique
Situations
- Particularly for some corporate and business taxpayers, the IRS
understands that there may be instances where the taxpayers desire to
begin an examination while people and records are available and respective
staffs have capacity. In those instances when it’s in the best interest of
both parties and appropriate personnel are available, the IRS may initiate
activities to move forward with an examination -- understanding that
COVID-19 developments could later reduce activities for an agreed period.
General
Requests for Information - In addition to compliance activities and
examinations, the IRS encourages taxpayers to respond to any other IRS
correspondence requesting additional information during this time if
possible.
Earned Income Tax
Credit and Wage Verification Reviews – Taxpayers have until
July 15, 2020, to respond to the IRS to verify that they qualify for the Earned
Income Tax Credit or to verify their income. These taxpayers are encouraged to
exercise their best efforts to obtain and submit all requested information, and
if unable to do so, please reach out to the IRS indicating the reason such
information is not available. Until July 15, 2020, the IRS will not deny these
credits for a failure to provide requested information. Independent Office of
Appeals – Appeals employees will continue to work their cases.
Although Appeals is not currently holding in-person conferences with taxpayers,
conferences may be held over the telephone or by videoconference. Taxpayers are
encouraged to promptly respond to any outstanding requests for information for
all cases in the Independent Office of Appeals. Statute of
Limitations - The IRS will continue to take steps where
necessary to protect all applicable statutes of limitations. In instances where
statute expirations might be jeopardized during this period, taxpayers are
encouraged to cooperate in extending such statutes. Otherwise, the IRS will
issue Notices of Deficiency and pursue other similar actions to protect the
interests of the government in preserving such statutes. Where a statutory
period is not set to expire during 2020, the IRS is unlikely to pursue the
foregoing actions until at least July 15, 2020. Practitioner Priority
Service – Practitioners are reminded that, depending on
staffing levels and allocations going forward, there may be more significant
wait times for the PPS. The IRS will continue to monitor this as situations
develop.
“The IRS will continue to review and, where appropriate, modify or expand
the People First Initiative as we continue reviewing our programs and receive
feedback from others,” Rettig said. “We are committed to helping people get
through this period, and our employees will remain focused on these and other
helpful efforts in the days and weeks ahead. I ask for your personal support,
your understanding – and your patience – as we navigate our way forward
together. Stay safe and take care of your families, friends and others.”
The filing season is the most active time of the year for tax scams. These scams take every shape and form, ranging from telephone calls to individuals to sophisticated schemes targeting employers and businesses. The goal of all these scams is identity theft. Using legitimate identities of unsuspecting individuals allows criminals to file fraudulent returns and claim bogus refunds.
Phone scams
Phone and email scams are among the most common scams. Every day, individuals receive calls and emails from criminals pretending to be IRS employees. Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. Criminals use IRS employee titles and fake badge numbers to appear legitimate. They may also use the victim’s name, address and other personal information to make the call sound official. The phone calls often threaten legal action or arrest if the taxpayers do not immediately make a payment, usually with a debit or gift card. Taxpayers receiving threatening telephone calls should hang up immediately. The IRS will never demand immediate payment using a specific payment method, such as a prepaid debit card, gift card or wire transfer. The IRS also will never threaten arrest.
Email scams
Email scams often ask recipients to provide personal and financial information in order “to verify” a tax obligation or claim a “refund.” The emails appear to be genuine communications from the IRS. Criminals create websites that appear legitimate in the hope that individuals will take the bait and provide money, passwords, Social Security numbers and other personal information. Scam emails also can infect a taxpayer’s computer with malware. The malware can give criminals access to the computer, laptop tablet, or other device, enabling them to access all sensitive files or track keyboard strokes, exposing login information. The IRS has repeatedly emphasized that it never initiates contact with taxpayers via email about a bill or refund. Taxpayers should delete these emails immediately.
Employers
Criminals are increasing disguising emails to make it appear as if the email is from a company or organization executive. Typically, this email is sent to an employee in the payroll or human resources departments, requesting a list of all employees and their Forms W-2, Wage and Tax Statement. This scam is sometimes referred to as business email compromise (BEC) or business email spoofing (BES). This scam targets all types of businesses: school districts, tribal casinos, chain restaurants, temporary staffing agencies, healthcare, and shipping and freight. Businesses that received the scam email last year also are reportedly receiving it again this year. The IRS has asked employers and businesses to forward these bogus emails to the agency at phishing@irs.gov.
Identity theft
The IRS is making progress in identifying and curbing tax-related identity theft, according to the Treasury Inspector General for Tax Administration (TIGTA). The IRS and tax professionals and the tax software community have joined together to better protect taxpayer information. The agency has upgraded its return processing identity theft filters and taken other behind the scenes measures to uncover fraudulent returns. All of these measures, TIGTA reported in February, have helped to deter tax-related identity theft but criminals continue to look for ways to trick taxpayers and the IRS.
Please contact our office at (630) 986-0540 if you have any questions about filing season tax scams.
The IRS has issued a great list of issues to consider when selecting a new tax preparer. Check out the Tax Tip below before you begin your search.
Issue
Number: IRS Tax Tip 2019-06
Ten things for
taxpayers to think about when choosing a tax preparer
It’s the time of the year when many taxpayers choose a tax preparer to help
file a tax return. These taxpayers should choose their tax return preparer
wisely. This is because taxpayers are responsible for all the information
on their income tax return. That’s true no matter who prepares the return.
Here are ten tips for taxpayers to remember when selecting a preparer:
Check the Preparer’s History. Taxpayers can ask the
Better Business Bureau about the preparer. Check for disciplinary actions
and the license status for credentialed preparers. For CPAs, people can
check with the State Board of Accountancy. For attorneys, they can check
with the State Bar Association. For Enrolled Agents, taxpayers can go to
the verify enrolled agent status page on IRS.gov or check
the directory.
Ask about Service Fees. People should avoid
preparers who base fees on a percentage of the refund or who boast bigger
refunds than their competition. When asking about a preparer’s services
and fees, don’t give them tax documents, Social Security numbers or other
information.
Ask to E-File. Taxpayers should make sure their preparer offers IRS
e-file. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and use
direct deposit.
Make Sure the Preparer is Available. Taxpayers may want to
contact their preparer after this year’s April 15 due date. People should
avoid fly-by-night preparers.
Provide Records and Receipts. Good preparers will ask
to see a taxpayer’s records and receipts. They’ll ask questions to figure
things like the total income, tax deductions and credits.
Never Sign a Blank Return. Taxpayers should not
use a tax preparer who asks them to sign a blank tax form.
Review Before Signing. Before signing a tax
return, the taxpayer should review it. They should ask questions if
something is not clear. Taxpayers should feel comfortable with the
accuracy of their return before they sign it. They should also make sure
that their refund goes directly to them – not to the preparer’s bank
account. The taxpayer should review the routing and bank account number on
the completed return. The preparer should give you a copy of the completed
tax return.
Ensure the Preparer Signs and Includes Their PTIN. All paid tax preparers
must have a Preparer Tax Identification Number. By law, paid preparers
must sign returns and include their PTIN.
Report Abusive Tax Preparers to the IRS. Most tax return
preparers are honest and provide great service to their clients. However,
some preparers are dishonest. People can report abusive tax preparers and
suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If a
taxpayer suspects a tax preparer filed or changed their return without the
taxpayer’s consent, they should file Form 14157-A, Return Preparer Fraud or Misconduct
Affidavit.
IRS Urges Travelers Requiring Passports to Pay Their Back Taxes or Enter into Payment Agreements
WASHINGTON ─ The Internal Revenue Service today strongly encouraged taxpayers who are seriously behind on their taxes to pay what they owe or enter into a payment agreement with the IRS to avoid putting their passports in jeopardy.
This month, the IRS will begin implementation of new procedures affecting individuals with “seriously delinquent tax debts.” These new procedures implement provisions of the Fixing America’s Surface Transportation (FAST) Act, signed into law in December 2015. The FAST Act requires the IRS to notify the State Department of taxpayers the IRS has certified as owing a seriously delinquent tax debt. See Notice 2018-1. The FAST Act also requires the State Department to deny their passport application or deny renewal of their passport. In some cases, the State Department may revoke their passport.
Taxpayers affected by this law are those with a seriously delinquent tax debt. A taxpayer with a seriously delinquent tax debt is generally someone who owes the IRS more than $51,000 in back taxes, penalties and interest for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired or the IRS has issued a levy.
There are several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt. They include the following:
Paying the tax debt in full
Paying the tax debt timely under an approved installment agreement,
Paying the tax debt timely under an accepted offer in compromise,
Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice,
Having requested or have a pending collection due process appeal with a levy, or
Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.
A passport won’t be at risk under this program for any taxpayer:
Who is in bankruptcy
Who is identified by the IRS as a victim of tax-related identity theft
Whose account the IRS has determined is currently not collectible due to hardship
Who is located within a federally declared disaster area
Who has a request pending with the IRS for an installment agreement
Who has a pending offer in compromise with the IRS
Who has an IRS accepted adjustment that will satisfy the debt in full
For taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual’s passport is not subject to denial during this time.
In general, taxpayers behind on their tax obligations should come forward and pay what they owe or enter into a payment plan with the IRS. Frequently, taxpayers qualify for one of several relief programs, including the following:
Taxpayers can request a payment agreement with the IRS by filing Form 9465. Taxpayers can download this form from IRS.gov and mail it along with a tax return, bill or notice. Some taxpayers can use the online payment agreement to set up a monthly payment agreement for up to 72 months.
Some financially distressed taxpayers may qualify for an offer in compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to determine the taxpayer’s ability to pay. To help determine eligibility, use the Offer in Compromise Pre-Qualifier, a free online tool available on IRS.gov.
Identity theft remains at the forefront of the IRS efforts during this filing season. The article below by the editor-in-chief of Accounting Today explains the current status of the situation and the IRS efforts to combat identity thieves.
IRS Still Coping With Identity Theft and Service Problems
By: Michael Cohn Published March 15 2017, 2:53pm EDT
The Internal Revenue Service is continuing to face challenges with identity theft and taxpayer service this tax season, although there have been some improvements since last year.
IRS deputy commissioner for services and enforcement John M. Dalrymple told lawmakers during a House oversight hearing last week the filing season has been relatively problem-free so far.
“I am pleased to report that the last several filing seasons have gone smoothly in terms of tax return processing,” he said, according to his prepared testimony. “Thus far the 2017 filing season has been no exception. As of February 24, the IRS received more than 52.3 million individual returns, on the way to a total of about 152 million. We have issued over 41.3 million refunds for more than $127 billion, with the average refund totaling approximately $3,071.”
Dalrymple noted, however, that the IRS was forced to rely on antiquated IT systems, with approximately 60 percent of the agency’s hardware and 28 percent of its software out of date and in need of an upgrade. “Continuing to rely on such outdated systems is costly and poses a risk of outages or failures,” he added.
He said the IRS has been making steady progress in combating identity theft. As a result of the PATH Act of 2015, the IRS is now required to give extra scrutiny to tax returns claiming the Earned Income Tax Credit or the Additional Child Tax Credit, and hold the tax refunds until February 15. “This change and another change accelerating the filing date of Forms W-2 have together helped the IRS improve its ability to spot incorrect or fraudulent returns,” he added.
Another PATH Act provision required Individual Taxpayer Identification Numbers to expire if they had been issued before 2013, or if the ITINs have not been used on a federal tax return for three years in a row. That too helped the IRS detect fraudulent returns, although the changes required significant resources to implement, Dalrymple noted.
He said the IRS has been making progress in deterring identity theft in recent years, thanks to the collaborative efforts of the Security Summit, which involves a partnership between the IRS, state tax authorities, tax software companies, and tax preparation chains. They have added extra authentication procedures, filters and information sharing to block criminals. But identity thieves are still trying to steal tax refunds. One CPA recently called Accounting Today and reported that several of his clients received notices this tax season from the IRS informing them their tax refunds had been claimed by someone else.
Dalrymple acknowledged that identity thieves are still trying to capture the refunds. “Even with this progress, the fraud filters in our processing systems are still catching a large number of false returns, which shows that identity theft continues to be a major threat to tax administration–a threat that receives our sustained vigilance and the continuous strengthening of our defenses against this crime,” he said.
During fiscal year 2016, Dalrymple noted that the IRS’s systems stopped more than $6.5 billion in fraudulent refunds on 969,000 tax returns confirmed to have been filed by identity thieves. Taxpayer Service
He said the IRS has also been making progress in helping victims of identity theft. Several years ago, it took an average of 300 days to close a case, but more recently the IRS has been meeting its goal of closing a case in an average of 120 days or less. The case inventory for identity theft victims has also declined from about 95,000 at the end of fiscal year 2015 to 28,900 last month.
The IRS has also been improving its telephone service for taxpayers. Last year, it used $178 million of the additional funding it received from Congress to hire an extra 1,000 temporary employees. As a result, the average level of service on the IRS’s toll-free phone lines during the 2016 tax season exceeded 70 percent, compared to a dismal average of 37 percent during the 2015 filing season. However, when the temporary employees went off the rolls at the end of last tax season, the phone level of service dropped again and ended up with an average of 53 percent for fiscal year 2016, but that was still better than 2015. So far, for the 2017 filing season, Dalrymple reported improved phone service, and he predicts the average phone level of service for the filing season as a whole will be about 75 percent. GAO Report
A report from the Government Accountability Office released on the day of the hearing also found the IRS provided better telephone service to callers during the 2016 filing season compared to 2015. However, the GAO noted that the IRS’s performance during the full fiscal year remained low. The GAO report also acknowledged that the IRS has improved some aspects of its service for identity theft victims, but still found some lingering problems.
“However, inefficiencies contribute to delays, and potentially weak internal controls may lead to the release of fraudulent refunds,” said the GAO. “In turn, this limits [the] IRS’s ability to serve taxpayers and protect federal dollars.”
The GAO recommended the IRS improve its file retrieval and scanning processes to speed up help to victims of identity theft. The GAO also sees problems with the IRS’s internal control processes that could lead to the IRS paying refunds to fraudsters. In discussion groups with the GAO, IRS assistors and managers said some of the assistors may release refunds even if indicators on the account show that the tax return is under review for identity theft, or two returns have been filed for that taxpayer. “Some participants said assistors answering telephone calls can release these holds because they do not understand the codes on the taxpayer's account,” said the report. “IRS officials said that these errors are not widespread and provided data to support their position.”
However, the GAO said it identified weaknesses in the data, which the IRS officials acknowledged. In response to the GAO’s report, IRS officials provided the GAO with another analysis in January of IRS data that they said showed this type of error does occur but may not be as widespread as its own staff and managers suggested. The GAO said it would continue to work with the IRS to determine if the additional data is enough to address its recommendations.
Another problem the GAO found is the IRS does not notify taxpayers when a dependent’s identity appears on a fraudulent return.
“According to IRS officials, the agency does not consider a dependent to be a victim if his or her Social Security number had been used as a dependent on a fraudulent return,” said the report. “However, [the] IRS has previously provided guidance to taxpayers when a dependent was a victim of identity theft. After one data breach in 2015, [the] IRS notified taxpayers and provided information on actions that parents could take to protect a minor's identity when their dependents were also victims. By not notifying taxpayers that their dependents' information may have been used to commit fraud, [the] IRS is limiting taxpayers' ability to take action to protect their dependents' identity.”
Inspector General Findings
Russell P. Martin, assistant inspector general for audit at the Treasury Inspector General for Tax Administration, also presented a report at last Wednesday’s hearing, which found some continuing problems with how the IRS is handling identity theft victims. TIGTA’s previous reviews from 2015 have identified long delays in case resolution and account errors, and that not all identity-theft victims receive Identity Protection Personal Identification Numbers, or IP PINs, he noted. Not all of those problems have been resolved in follow-up reports.
TIGTA is also concerned about the IRS’s increasing reliance on technology-based assistance to make up for cuts in face-to-face service. “The risk of unauthorized access to tax accounts increases as the IRS expands its focus on delivering online tools,” said the report. “The increasing number of data breaches in the private and public sectors means more personal information than ever before is available to unscrupulous individuals. Many of these data are detailed enough to enable circumvention of most authentication processes.”
The IRS isn't the only federal agency struggling to control identity theft. On Wednesday, members of the House Ways and Means Committee introduced two pieces of bipartisan legislation to protect Americans from identity theft. One bill would prevent the Social Security Administration from mailing any document containing a full Social Security number unless it is necessary. The other bill would require the Social Security Administration to issue a new Social Security number to any children under the age of 14 who have had their Social Security card stolen after it was mailed by the SSA.
Congress ended 2016 passing a few targeted tax bills and lawmakers focused on the incoming Trump administration and tax reform in 2017. President-elect Donald Trump campaigned on tax cuts for individuals and businesses. Already, lawmakers from both sides of the aisle are preparing for what is expected to be spirited debate over tax cuts in 2017.
Year-end legislation
In December, President Obama signed the 21st Century Cures Act and the Combat-Injured Veterans Tax Fairness Act. Under the 21st Century Cures Act, eligible small employers may adopt qualified small employer health reimbursement arrangements (QSEHRAs) to reimburse employees for the cost of premiums for individual or family health coverage without being subject to group-health plan requirements. The new law also extends transition relief for small employers. Without the new law, small employers ran the risk of a costly excise tax. The Combat-Injured Veterans Tax Fairness Act will refund money that was improperly withheld for tax purposes from severance payments to certain veterans of the U.S. Armed Forces. Both bills enjoyed bipartisan support in the House and Senate.
Unlike past years, Congress did not take up the so-called tax extenders in December. The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) extended or made permanent many extenders but left out some incentives for energy efficiency and production, along with a few incentives for individuals. These remaining extenders could be taken up in 2017 as part of tax reform.
New administration
On the campaign trail, President-elect Donald Trump called for reducing the tax rates on individuals, lowering the corporate tax rate, repealing the federal estate tax, and creating new incentives for families. President-elect Trump also called for eliminating some unspecified tax preferences and taxing carried interest as ordinary income. More details are expected to be unveiled after President-elect Trump’s takes office on January 20.
House Republicans in June 2016 put forth a tax reform package that has many similar features to President-elect Trump’s proposals. The House GOP plan calls for individual and business rate cuts. However, there are differences. One difference is the House GOP’s so-called border adjustability; another difference is the GOP’s elimination of the IRS Oversight Board. These and other provisions are certain to generate debate in the early part of 2017.
Any tax reform package will need not only to pass the House but also the Senate before reaching the White House. While Republicans have a majority in the Senate, the chamber’s rules generally require a super-majority to pass tax bills. Republicans could use a process known as reconciliation to pass a tax reform bill with a simple majority. Any move to use reconciliation will also likely spark debate among lawmakers.
If you have any questions about year-end 2016 tax legislation or the prospects for tax reform in 2017, please contact our office at (630) 986-0540.
Tax identity theft is a serious topic at any time, but especially at this early point in the 2016 filing season. The following article from Accounting Today provides some timely information.
Taxpayers Have False Sense of Security about Identity Theft
Taxpayers are not doing enough to protect themselves from identity theft-related tax fraud and a majority of them don’t expect it to happen to them, according to a new survey.
The survey, from security company IDT911, found that 63 percent of Americans are taking an “it could never happen to me” approach and say they aren’t worried about their identities being stolen this tax season despite high-profile data breaches involving the Internal Revenue Service and some service providers.
Nineteen percent admitted they have not ensured their Wi-Fi network is password protected if they are filing their taxes online, and 49 percent said they don’t even lock their mailbox when receiving their tax refund through the mail, potentially exposing sensitive personal and financial information to thieves.
Despite the uptick in tax-related identity theft incidents, 48 percent of those surveyed believe the holiday shopping season is the most risky time of year. Tax-filing season came in second at 30 percent.More than a third (38 percent) of the 1,500 adult U.S. consumers surveyed said they’re unsure how to vet a tax preparer, including an overwhelming 92 percent of Millennials aged 18 to 34. Over half of the respondents (52 percent) said they do not trust, or are not sure if they trust, online tax services, likely due to the recent data breaches of multiple providers.
Only 12 percent planned to file their taxes in January despite experts advising consumers to file as early as possible in order to beat out identity thieves who might potentially claim their tax refunds.
“Tax season has become fraud season,” said IDT911 chairman Adam Levin. “As breaches have become the third certainty in life, cybercriminals are able to glean information from literally hundreds of millions of compromised records in order to target consumers in tax related identity theft and phishing schemes. In today's dangerous digital world, each of us must be vigilant and remain on high alert.”
IDT911 said its fraud center saw a 154 percent increase in tax-related cases from 2014 to 2015, with 2016 showing no signs of slowing down. Tax refund fraud losses are estimated to reach $21 billion by 2016, according to the Treasury Inspector General for Tax Administration, and the Federal Trade Commission recently announced that it received a 47 percent increase in identity theft complaints in 2015, with tax refund fraud being by far the biggest contributor. These numbers are expected to rise if the proper precautions are not put in place.
Despite the increased likelihood of identity theft during tax season, many Americans may not know where to go when they are eventually impacted. More than a third of the survey respondents (38 percent) are unsure if their financial services or insurance providers offer identity theft or fraud protection services. The majority of respondents (57 percent) said their financial institution would be the first entity they’d contact once they learned they were the victim of a data breach.
Please contact our office at (630) 986-0540 or taxes@brummetandolsen.com with any questions.
