Paid tax preparers are an integral part of the U.S. tax system. They do about 60% of all returns each year, according to the Internal Revenue Service. Not all tax professionals are alert to the subtle signs of data theft. The IRS and its Security Summit partners note that there are many cases where tax preparers are victims of theft and don’t even know it.
Cybercriminals often leave very few signs of their intrusion. A tax preparer might not even realize that the cybercriminal stole client data until a fraudulent tax return was filed with the information, and their client becomes an ID theft victim.
In many cases, when someone files a tax return using your Social Security number, you won’t find out until after the second return is filed. The second return could be from you or the person who has stolen your information.
This is one reason tax professionals should use strong security protections to prevent data theft from occurring. It is also very important for you to recognize the signs whether your tax preparer had a security breach.
Here are some warning signs that a tax preparer’s office may have experienced a data theft:
- Your company’s e-filed returns that were filed electronically begin to be rejected by the IRS. The reason given is that someone already filed a tax return with the same Social Security or Tax ID number.
- Your company hasn’t filed tax returns but begin to receive taxpayer authentication letters from the IRS. These letters include the 5071C, 4883C and 5747C.
- Your company hasn’t filed tax returns but receive refunds.
- Your company receives tax transcripts that they did not request.
- The professional or company who created an IRS online services account receives an IRS notice that the account was accessed. They might also receive an IRS email saying their account has been disabled.
- Your company unexpectedly receive an IRS notice that an online account was created in its (or your) name.
- Tax professionals or your company are responding to emails that neither sent or does not remember sending.
- The tax preparer’s network computers are running slower than normal.
- The tax preparer’s computer cursors moving or changing numbers without someone touching the keyboard.
- The tax preparer’s network computers lock out employees.
It is not likely you will have firsthand knowledge of the last three but it is good to ask questions about the tax preparer’s operations to ensure there are no surprises.
Even if you don’t receive a notification letter from the IRS but suspect a fraudulent return has been filed with your information, you can still take action. You may prefer to contact us. We can follow up and file the required forms.
IRS Form 14039
When another a tax return has been filed with your Social Security number, use IRS Form 14039 to alert the IRS. When you complete this form, you will report that someone stole your identity and filed a return using your identity and has affected your tax account. You also provide the tax year affected and the last return you filed prior to the identity theft.
The IRS and its partners are alerting tax preparers about the signs of an ID theft as part of the Tax Security 101 awareness initiative. The goal is to provide tax professionals with the basic information they need to better protect taxpayer data and to help prevent the filing of fraudulent tax returns.
…but it is up to your team to watch for signs to know if your tax preparer has become a victim with a data breach.
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