Tax professionals should learn the tell-tale signs that their office may have experienced a data theft. Such thefts could have resulted in fraudulent tax returns filed in their clients’ names.
Here is a list of warning signs that a tax professional or their office may have experienced a data theft:
• Their clients’ e-filed returns are rejected by the IRS or state tax agencies. This happens because someone else already filed a tax return with their client’s Social Security number.
• Clients who haven’t filed tax returns begin to receive taxpayer authentication letters from the IRS. The IRS sends letters such as the 5071C, 4883C and 5747C to confirm a taxpayer’s identity for a submitted tax return.
• Clients who haven’t filed tax returns receive refunds.
• Clients receive tax transcripts that they didn’t request.
• Clients who created an IRS Online Services account receive an IRS notice that their account was accessed.
• Clients who have an account get an IRS emails saying their account is disabled.
• Clients unexpectedly receive an IRS notice that an IRS online account was created in their names.
• The number of returns filed with the tax professional’s Electronic Filing Identification Number is higher than the number of clients they have.
• Tax professionals or clients responding to emails that the firm did not send.
• Network computers running slower than normal.
• Computer cursors moving or changing numbers when the user is not even touching the keyboard.
• Network computers locking out employees.
• Federal Trade Commission Safeguards Rule
• Publication 4557, Safeguarding Taxpayer Data
• Small Business Information Security: the Fundamentals, by the National Institute of Standards and Technology
• Publication 5293, Data Security Resource Guide for Tax Professionals
• e-News for Tax Professionals