OKLAHOMA SOCIETY OF CPAS TULSA CHAPTER

1. Anita Douglas Senior Stakeholder Liaison OKLAHOMA SOCIETY OF CPASTULSA CHAPTER April 21, 2016

2. IRS Identity Theft Victim AssistanceThe Process and the Improvements

3. Tax-Related Identity Theft Three Warning Signs • Taxpayer learns of a duplicate SSN either from an IRS notice or e-file return rejects • IRS notice about additional tax owed, refund offset or collection action when no return filed • Taxpayer receives information from an employer unknown to them

4. Tax-Related Identity Theft • Taxpayer Protection Program generates: • Letter 4883C for prior-year suspicious returns • Letter 5071C for current-year suspicious returns • Most common correspondence • Taxpayer self-verifies at Idverify.IRS.gov • Letter 5447C for suspicious returns with foreign addresses

5. Steps for Victims of Tax-Related Identity Theft • Complete and file IRS Form 14039 • Respond to any IRS letters or notices • Continue to pay taxes, even if by paper • Place a “fraud alert” on credit accounts by contacting one of the three main credit bureaus • Close any accounts opened by criminals • File a complaint with the FTC

6. Centralizing Victim Assistance • Most victim assistance work centralized under one director • New Identity Theft Victim Assistance organization created • Policy and operations under one leadership team • More consistent treatment for taxpayers • Reviewing IDTVA process for improvements

7. About the Identity Protection PIN (IP PIN) • Six-digit number that adds an additional layer of protection along with the SSN or ITIN • Victims notified once tax-related IDT case resolved • Taxpayer will receive a CP01A notice containing a new IP PIN each year • Some taxpayers have the option of getting an IP PIN from IRS.gov • Enter numbers for all IP PIN holders

8. Recap Victim Assistance Changes • We’ve centralized most of identity theft victim assistance work • We’re reviewing victim assistance procedures • We’re continuing to test the IP PIN in three locations, and • We’re strengthening verification procedures for Get Transcript and IP PIN

9. Presenter’s name Business Identity TheftKnow the Warning Signs; Steps to Take Date

10. Warning Signs of Business Identity Theft • IRS notices about fictitious employees • IRS notices about a defunct, closed or dormant business • IRS accepts your tax return as an amended return

11. IRS efforts to combat Business Identity Theft • W-2 Verification Code Pilot • Testing a 16-digit code for the Form W-2 • Taxpayer enters code on return as part of W-2 entries • Code helps verify authenticity information on the Form W-2 • Improved return filtering and modeling • Help stop business refundable credit fraud

12. Steps for Business Victims of Identity Theft • Respond immediately to any IRS notice • Review account statements • Review business registration information online • Monitor credit reports for suspicious activity • Close any accounts tampered with or opened • File a complaint with FTC

13. Steps for Business Victims of Identity Theft Place a fraud alert on credit reports; contact one of four business reporting companies: • Dun & Bradstreet • 800-234-3867; smallbusiness.dnb.com • Equifax • 800-5256285; equifax.com • Experian • 888-397-3742; experian.com • TransUnion • 800-916-8800; transunion.com

14. Protect Your Employee/Client Data • Use top-notch security software • Firewall • Anti-virus protection • File Encryption • Education employees about safe online practices • Recognize and avoid phishing emails and schemes • Never click a link or download attachments from unknown sources

15. Protect Your Employee/Client Data • Create a security plan • IRS Publication 4557 checklist • Create a data loss action plan • Review FTC.gov suggestions • Notify law enforcement • Notify affected businesses • Notify affected individuals

16. Taxes. Security. Together • Join IRS, State and Industry efforts to increase public awareness about security online and at home • Share IRS Publication 4524 or other educational materials with employees and customers • Increased awareness helps protect your company

17. W-2 Verification Code Pilot • One in a series of steps to combat ID theft and tax fraud • Pilot will test capability to verify authenticity of W-2 data filed with federal tax returns in 2016 • IRS will soon name Payroll Service Providers • PSPs will reach out to some clients • Algorithm generates alphanumeric codes from selected data fields of the W-2 • Verification codes appear on employees’ W-2s

18. W-2 Verification Code Pilot • Taxpayers enter verification codes on their e-filed federal tax returns • When processing returns, IRS recalculates codes • Matching codes = genuine W-2s • Verification codes not included in W-2 data submitted to SSA, states or local departments of revenue • Won’t affect state or local tax returns

19. W-2 Verification Code Pilot • We stress: • Omitting or using incorrect W-2 verification codes will not delay the processing of taxpayers federal tax returns • “test-and-learn” review after pilot • If integrity of W-2 information submitted by taxpayers increases, verification codes will remain an element of W-2s in the future

20. Data Theft and Securing Client Tax Information

21. Bullet Point Slide (36pt.) • The risk is real; preparers are prime targets for identity thieves • Cybercriminal tactics constantly evolve • Data loss can occur so many ways: • Burglar steals office computers • Cybercriminal breaches your systems using phishing and malware schemes • Disgruntled employees steals client info • Dispose of old devices without erasing data

22. Data Theft Tactics • Phishing emails, text or calls • Pose as trusted organizations • Embed links to fake websites • Use malware-infected attachments • Risks of opening phishing scams • Account take-overs (Banks, IRS e-Services, Tax Software) • Computer breaches • Educate employees on scams/risks

23. Protect your EFIN • IRS reviewing improvements to EFIN safeguards • Stepped up efforts to expel EFIN abusers; • Increased on-site visits as part of monitoring process • EFIN holders should review return numbers during filing season • e-Services Account updated weekly • Excessive numbers can be reported toe-Help Desk

24. Steps to Protect Client Data • Read Publication 4557, Safeguarding Taxpayer Data • Review current security measures • Create a security plan • Use top-notch software security • Educate all employees • Use strong passwords • Secure Wi-Fi • Encrypt PII emails • Backup files

25. Plan Ahead for Data Loss • Create a reaction plan for data theft • Call IRS Stakeholder Liaison (found on IRS.gov) • Review Federal Trade Commission’s “Business Center” to assist businesses with data losses • Notify police • Notify businesses • Notify clients

26. Help Educate Clients • IRS, state tax administrators and tax industry working together to increase public awareness about security protections online and at home. • Review Publication 4524, Security Awareness for Taxpayers • Consider printing and sharing this one-page guide with your clients

27. Summary • The risk is real • Make a security plan • Make a data loss plan • Contact Stakeholder Liaison if you experience a data compromise

28. THANK YOU!!!! Anita Douglas 405-982-6699 - New! Anita.E.Douglas@irs.gov