Security Summit warns of identity theft and unemployment fraud
TAX ALERT |
Authored by RSM US LLP
The IRS Security Summit (Summit) urges the tax community to learn the tell-tale signs of identity theft. The Summit consists of state tax agencies, tax preparation firms, software developers, payroll and tax financial product processors, tax organizations, and financial institutions. The Summit urges taxpayers and tax professionals to immediately contact the IRS, insurance or cybersecurity experts when dealing with identity theft issues.
Some of the tell-tale signs tax professionals should be aware of include: rejection of electronically-filed tax returns because the taxpayer’s social security number has already been used on another return; receipt of more than one electronic confirmation that a return was filed; clients responding to correspondence, which the tax practitioners did not initiate; and slow or delayed network responsiveness. Tax professionals should be mindful of these signs of identity theft and advise their clients properly.
Other suspicious indicators of identity theft include: receipt of communications or payments from the IRS without filing any returns; receipt of tax transcripts that the taxpayer did not request; unsolicited emails or phone calls from tax professionals; or notices that someone created, assessed or disabled the taxpayer IRS online account. Tax professionals must exercise due diligence when taxpayers receive authentication letters because responding to these will corroborate that the IRS is dealing with the taxpayer, and not an identity thief.
If a tax professional suspects an incident of identity theft, it is crucial to take immediate action. The Summit recommends contacting the local IRS Stakeholder Liaison immediately. The Liaison will contact the IRS Criminal Investigation on behalf of the tax practitioners to block any fraudulent returns.
Unemployment benefits theft
One area that has experienced a surge in fraud and identity theft is unemployment benefits. Criminals are using stolen identities to file and collect unemployment benefits.
Taxpayers should recognize certain red flags that they might be a victim of unemployment fraud. For example, they may receive communications from a state agency about unemployment claims or benefits when they have not filed for benefits. Taxpayers might notice their Form 1099-G reflects an unemployment benefit amount that does not match the taxpayer’s records. In some cases, a taxpayer’s employer might receive requests for information pertaining to unemployment benefits while the taxpayer is still is employed.
For victims of unemployment benefits identity theft, the IRS recommends that taxpayers proceed with filing a return, even though the fraud is under investigation. The IRS suggests victims of unemployment benefits theft register for the IRS Identity Protection PIN program, which generates a six-digit number that prevent criminals from filing tax returns using the taxpayer’s identity.
Employers should act swiftly to notices that their employees have filed unemployment claims. Employers should file Form 14039-B, Business Identity Theft Affidavit, if their employer identification number (EIN) is used to file fraudulent unemployment benefit claims. The IRS recommends that the employers close out any business tax account with the IRS whenever the business has terminated to thwart misuse of EINs.
As reports of identity theft surge, taxpayers and tax professionals need to be cognizant of the warning signs to prevent criminals from stealing their information. If you have any questions, please contact a member of RSM’s Tax Controversy Team.
Call us at (800) 624-2400 or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by Evan Stone, Truong Do and originally appeared on 2021-08-24.
2021 RSM US LLP. All rights reserved.
The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Weinlander Fitzhugh is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Weinlander Fitzhugh can assist you, please call (989) 893-5577.