According to a recent survey by the "Journal of Accountancy," sixty-three percent of CPAs who answered the survey said at least one of their clients was a victim of tax identity theft in the 2015 filing season.
In the survey, conducted in May, most CPAs reporting theft of clients' IDs said the problem affected fewer than 5% of their clients, although 76 respondents (2%) said between 6% and 10% of their clients were victims. Ten respondents reported between 11% and 15% of their clients were victims, and two respondents put the percentage at more than 15%.
CPAs interviewed in connection with the survey's findings on identity theft detailed long telephone wait times and other frustrations experienced by victims of identity theft in dealing with the IRS.
Many respondents had some difficulty dealing with the IRS in resolving the issues, with only 27% saying it was easy or very easy to resolve, and 39% saying it was difficult or very difficult. A significant percentage of respondents, 44%, reported that the victims were unaware of the theft before attempting to file their 2014 returns, and another 42% said some victims were aware of it and others were not.
Can it happen to you?
Smith Dickson has seen this happen to some of our clients as well. In certain cases, the IRS or Franchise Tax Board (FTB) will notice some irregularities (e.g., duplicate social security numbers, W-2 changes, number of dependents, different mortgage company vs. previous years) and will then contact the taxpayer to determine if someone is attempting to file a fraudulent tax return on his/her account. According to Karen Reed, CPA, Senior Manager at Smith Dickson, "If your employer has reported that its system has been hacked, pay attention - your data may be used for tax identity theft."
What to do if it happens to you
Karen also suggests "The Federal Trade Commission has a very useful website, https://www.identitytheft.gov/, which provides a number of steps to recover from identity theft." Some of the tips include:
Act quickly to limit the damage: (1) Call the companies where you know fraud occurred, (2) Place a fraud alert and get your credit report, (3) Report identity theft to the FTC, and (4) File a report with your local police department. Next, take steps to repair the damage: (1) Close new accounts opened in your name, (2) Remove bogus charges from your accounts, (3) Correct your credit report, and (4) Consider adding an extended fraud alert or credit freeze.
If you have any questions or concerns regarding tax identity theft, please contact our office.