For tax-related ID theft, we want you to take one more step. The IRS would like you to file the Form 14039, which is the Identity Theft Affidavit – and this is a form that tells us that your client has been a victim of tax-related or is suspected of being a victim of tax-related identity theft – and send it into the IRS. Again, respond to any letters and notices that they get. The last one seems kind of obvious, but you would be surprised the people that don’t do this. .
Identity Theft and Taxes
Continue to file the taxes even if somebody else already has under your number. Just because a return has been filed under your Social Security number doesn’t give you a pass on this year’s taxes. You have still got to file the return. They are going to file a paper return, but they have still got to file the correct return
Preparers will need a power of attorney or a CAF
Preparers will need a power of attorney or a CAF if the identity theft unit is going to talk to them. One question I can answer from the last one as to why that box is on there for the preparers: that is only for submission processing during the processing of the return. It doesn’t allow IRS to talk to the practitioner about the tax return after it has been processed. It is only if IRS has a question during the processing of the return to get it posted. That is why the box is there. But if they are going to talk to you about the identity theft case, make sure that you put on the power of attorney the tax year, the tax return, and all identity theft matters. Because, in some cases, depending on the identity theft, if you call up, even if you are the power of attorney for the 1040 for that year, they may not talk to you about the identity theft case. So, make sure that you put the identity theft case on the 2848 when you file it with IRS.
The top line says, “Submit only for taxpayers who are at risk or suffered a personal loss with an SSN.” I am going to change this and I am going to say, “If somebody believes they are at risk for this happening.” I would rather have it be proactive than reactive. If somebody comes to you and says, “I think I have lost my Social Security number” or “This place got hacked and my Social Security number was in these records,” go ahead and file the form.
How to Fill-Out Form 14039
When you check the appropriate box… there are two boxes on the 14039. Box 1 says, “I’ve been the victim of identity theft and it has impacted my tax administration.” That is generally one of the ones where I couldn’t file the return because somebody else already has. That’s where that pops in. So, if that has happened to you, you check Box 1. Check Box 2 if the person has had an incident happen that you believe it may include a Social Security number, but it hasn’t impacted their taxes yet. These are going to happen, for example, after the fact. You hear your doctor’s office got hacked and lost all their records. You think your Social Security number is on their records. “I want to be proactive.” You check Box 2 because Box 1 generally means you couldn’t file a tax return, and you’re going to have to do a second step. Make sure that you do all verification there is. You are going to have to put a copy of a Social Security card and a state ID form on there so we know who you are. Follow the submission instructions. Now what this means is, depending on which box you check and how you file the return depends on the instructions you are going to follow.
If you are filing it regarding a tax-related incident, you have to put the 14039 on top of the tax return and file it in the place where you normally file a paper return. You would send it to the regular place you normally would. If you are sending in just the form itself – there was no tax return impact, but you think there might be, you check Box 2 – look on the back of the form and find out where to send it, because that is going to have a different address than the actual tax return is going to go to. What happens when we receive the paper return is it comes in, we mark it as a potential identity theft return on the account, we take the information off of the account, we send the information over to our IPSU (which is the Identity Protection Specialized Unit), and they go ahead and process the information. We go ahead and process the return, and this is where it gets a little bit interesting.
IPSU Goals and Form 14039
The IPSU goals are, basically, identify it, because either you’ve picked it and sent in the Form 14039 or it’s through filters. Correct the accounts quickly, and this is where I want to identify the word “quickly.” We’ve had a lot of complaints because, well, it takes a long time. Right now, the average time for getting an identity theft return turned around – that is one that has already been impacted – is usually about 120 days. It wasn’t too long ago… as a matter of fact, two years ago, it would take a year. Part of the reason is sheer volume. We go through just about 900,000 identity theft returns a year, and we have to go through and fix each one of them.
Filing Form 14039
Again, part of IPSU is putting indicators on accounts. We want to make sure that once it happens to your taxpayer in the beginning, it doesn’t happen again. The worst thing that could possibly happen is you go through the trauma of “I can’t file my return,” send it to us, and it happens again next year. I am not saying it can’t happen. There is a little window that allows it to happen. For example, if you file the Form 14039 and you file it in October, there is a very good possibility we may not get that resolved until after the next filing season starts, after the 120 days. So, there is that little window, but we like to get it done as soon as possible and be able to stop it from happening again. The third thing is to be able to communicate with the ID theft victim.
Identity Theft and Form 14039
We want them to know, and we’ll be the first to admit our communication in the past has not been that great. Right now, we are writing letters to let taxpayers know what the statuses of their cases are. We send them a letter when the case gets resolved. We want the taxpayer to feel comfortable in what it is that’s going on with the IRS because we don’t want them to think this application goes in this big black hole.