Identity theft continues to be a growing problem in the marketplace in general and specifically with the Internal Revenue Service. The Government Accountability Office reports that the IRS paid out $5.8 billion in fraudulent refunds in 2013.
As part of a continuing effort to combat identity theft, the Internal Revenue Service has announced an online program to assist them in verifying Taxpayer identities when their internal criteria raise issues as to whether a return was actually filed by the Taxpayer whose name and Social Security number appear on it.
The first step of this program is the mailing of a letter to the Taxpayer in question requesting that the Taxpayer reach out to the IRS to begin the identity verification process (a 5071C Letter). The IRS will NEVER call or send an email with these requests.
The letter from the IRS will request that the Taxpayer call a toll free number or log onto the special website (https://idverify.irs.gov) to begin the identify verification process. The process will consist of two parts. First, the IRS will verify the Taxpayer’s identity by asking questions that only the Taxpayer can answer. Some of these questions may come from the IRS using questions provided by third party credit reporting companies to confirm identity. Once identity is established, the Taxpayer will be required to verify certain key data from the tax return that was filed.
Once a 5071C letter is received from the IRS requesting this process, the tax return will not be processed until identity has been satisfactorily verified.
The IRS recommends using their secure website rather than the toll free number to complete this process since it will avoid long wait times on the phone. The website also provides assurance that you are in fact communicating with the IRS.
If you receive a 5071C letter and have questions about it, please reach out to your Janover team. Do not ignore these letters as doing so will prevent the processing of your tax return.
Posted by Ronald Hegt, CPA