Identity Theft Information and Tools

The growth of tax-related identity theft incidents is a trend that concerns all taxpayers and practitioners. At the end of fiscal 2012, the IRS had almost 650,000 identity theft cases in its inventory, according to the IRS National Taxpayer Advocate.

The problem has grown worse as thieves have found creative ways to steal Social Security numbers (SSNs), file tax returns using taxpayers’ names and SSNs, and obtain fraudulent tax refunds. When the real taxpayer files a return claiming the refund, that return is rejected. More than 75% of taxpayers filing returns are entitled to refunds; however, those whose identities are stolen will not likely receive a refund until the IRS determines the real identity of the taxpayer.

The AICPA shares members' concern about the impact of this issue and offers the resources below to help members advise their clients and take steps to protect client information.

	AICPA Articles & Resources Stopping Identity Theft: Practical Advice for CPAs and Clients (Journal of Accountancy): Overview of current filtering and detection processes, as well as simple tips to follow. What Can CPAs Do about Identity Theft? (Blog) Some easy suggestions to follow to help protect client information. Transferring Client Data Securely (Tax Adviser): In-depth article addresses the risks of data transfer and the various technical options available to lower risk. How to Advise Victims of Identity Theft (Archived Webcast): Practitioner Daniel Moore offers an excellent overview of what to do and what to say. Treatment of Identity Theft Returns Clarified (Tax Adviser): The IRS Office of Chief Counsel talks about deficiency notices.

AICPA Articles & Resources

Stopping Identity Theft: Practical Advice for CPAs and Clients (Journal of Accountancy): Overview of current filtering and detection processes, as well as simple tips to follow.
What Can CPAs Do about Identity Theft? (Blog) Some easy suggestions to follow to help protect client information.
Transferring Client Data Securely (Tax Adviser): In-depth article addresses the risks of data transfer and the various technical options available to lower risk.
How to Advise Victims of Identity Theft (Archived Webcast): Practitioner Daniel Moore offers an excellent overview of what to do and what to say.
Treatment of Identity Theft Returns Clarified (Tax Adviser): The IRS Office of Chief Counsel talks about deficiency notices.

	IRS Resources A one-page guide for ID theft victims that includes signs of possible tax ID theft, an affidavit to report it to the IRS and links to credit bureaus. Three signs that tax identity theft may have occurred Fact sheets and videos for taxpayers that describe steps they can take to prevent identity theft

What's Happening in Washington

AICPA Advocacy
In addition to monitoring federal efforts to combat identity theft, the AICPA is advocating for ways to protect taxpayers' identity, such as truncating Social Security numbers on information returns. We also spoke out on the IRS' proposed Real-Time Tax System, which could help reduce identity theft.

Regulatory Action
The Treasury's Inspector General for Tax Administration issued a report stating that the IRS had missed 1.5 million tax returns with potentially theft-related tax refunds in excess of $5.2 billion for the 2011 filing season, and offered several recommendations for the IRS to improve detection. The IRS has developed several processes and programs to combat identity theft and help theft victims.

Legislative News
Several bills have been introduced in Congress to help curb identity theft, including the Stop Identity Theft Act of 2013, which directs the Attorney General to focus enforcement in certain ways and defines organizations as victims. A person convicted of identity theft in relation to tax fraud would be subject to a fine and/or up to 20 years' imprisonment.

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