ID theft and flat tires

[Possi]

There was a college here whose files were hacked, and I seem to have every frikkin' student in my database. I have never in my life seen so much ID theft. Adults and dependents alike. Then, it flips to a paper return, federal and state. What time sucking flat tires this causes! I feel like I'm being robbed every time I have to print and process another paper return.

Rant over. Thanks. And now, back to your regularly scheduled program.

cheers

[Jack from Ohio]

31 minutes ago, Possi said:

There was a college here whose files were hacked, and I seem to have every frikkin' student in my database. I have never in my life seen so much ID theft. Adults and dependents alike. Then, it flips to a paper return, federal and state. What time sucking flat tires this causes! I feel like I'm being robbed every time I have to print and process another paper return.

Rant over. Thanks. And now, back to your regularly scheduled program.

cheers

I charge extra when, through no fault of my own, the return has to be filed by mail instead of electronic.

[JohnH]

 

I don't charge extra for paper.   If they want to paper file, I prepare the return. 

If they require e-flnging, I don't charge extra.  I send them somewhere else. 

[Pacun]

I was going to say "How quickly we forget. A few years ago, we were complaining that efile was been forced on us and now we get unhappy when we have to paper file". Believe me, I know your pain because even before it was mandatory, I efiled. I love efile because if for some reason a social security number or last name is wrong, I get the rejection within hours instead of my client receiving a letter 2 months later when paper filed.

I remember JohnH for two things: Efiling and pdf printer. AND other favors of course.

Here is my rant.

DC gov is worried about Identity theft and they are now sending letters to people asking them to verify their identity. Good move, right? Except that I have prepared taxes for 10 years for married couple. They have a house and for the last 10 years they have the same job, the same situation (DC portion) about the same refund, used the same tax preparer and the preparer the efile code and the tax payers have used the same efile codes, no change of addresses in the last 10 years and yet DC has ask them to verify their identity. DC started by asking for W-2, then to pass a quiz, then to bring their ID to their offices. Federal refunded 45 days ago and DC no yet. What a waste of resources.

MD on the other hand is using computers smartly. They closed a lot of Liberty Tax offices because they compared returns and other items and found out that those offices were not complying.

Back to work!

[Catherine]

38 minutes ago, Pacun said:

Here is my rant.

I agree with your rant.  It should be trivial - and mandatory - to hold a return for investigation when the name and ssn do NOT match last year's data.  Even if name and ssn match but address has changed - might be worth a peek.  But to do NOTHING about egregious differences and then hold a refund for folks with the same demographic info for years running is just a bone-STUPID waste of resources.  And the time taken investigating this means dozens of frauds WILL go through because the investigators are busy doing things that should not be done.

[Lion EA]

Little old man who rents and has SS with the exact same w/h as years past.  Called a week or two ago that he hadn't received his refund in a month; Where's My Refund says Processing.  Today calls with an IRS letter demanding he send them his W-2s, 1099-Rs, W-2Gs, etc.  The only one he has had for years is 1099-SSA.  The numbers on the letter match the return exactly.  Don't you think the IRS has access to the 1099-SSA?  Wife and son passed away years ago, sold house years ago, moved into a retirement community (rents) years ago, same SS w/h for years, same refund for years.  Spend your time chasing the crooks or at least looking at returns with a big change to make sure they're right.

[jklcpa]

I'm wondering if one of my older clients will get a letter like this also. He has a lot of income on his return but he also still has an S corp with a W-2 to himself that has been the same amount for years; same gross, same withholdings. He adjusts for the balance of his taxes by paying estimates. Same preparer too. 

[Lion EA]

My other "still processing" (I think I have three that called, but can't remember the third right now) is my own kids who had a baby and worked less due to enforced bed rest, closing their bakery during the bed rest, etc., so their return had a lot of changes:  family size up, income down, EIC for the first time, etc.  I can see why it would be looked at.  If a real human being checked the SSN to see that a baby was born during 2015, the rest would fall into place, though.  They really need their refund after lower income for months.  With mom's health, they are not reopening the bakery until May.

[RitaB]

1 hour ago, Lion EA said:

Little old man who rents and has SS with the exact same w/h as years past.  Called a week or two ago that he hadn't received his refund in a month; Where's My Refund says Processing.  Today calls with an IRS letter demanding he send them his W-2s, 1099-Rs, W-2Gs, etc.  The only one he has had for years is 1099-SSA.  The numbers on the letter match the return exactly.  Don't you think the IRS has access to the 1099-SSA?

This is the situation with one of mine.  He was/is furious, went into the Knoxville office to inquire as to why his refund was held up.  Mentioned that his kickass preparer thought it might be the large SS withholdings.  Refund is 14,492.  IRS agent says, "Nah, people have big refunds all the time, it's probably preparer error.  You were mailed a letter on March 23 explaining but I don't know what the letter said."

Well, the next morning the agent called him and said, "It appears to be the large SS withholdings... my supervisor will be calling you..."

1)  Probably preparer error???????

2)  Communicate with SSA already.  C'mon.

3)  Client has not received any letter.  I guess that's preparer error, too.

[Lion EA]

My guy had about $3,000 withheld.  Chase the identity thieves getting $20,000 refunds!

[BulldogTom]

15 hours ago, Lion EA said:

Chase the identity thieves getting $20,000 refunds!

Easy on that.  I have a high income couple with a 20K refund this year.  I have not heard it is in examination, but I expect it to be (probably not, this is the IRS we are talking about). 

Here is why the large refund.  Income over 200K every year for the last 7 or 8 years.  6 years ago, when the babies were old enough to go to school, they moved to another school district in the same area.  Rented out their home because it was so under water from the Recession.  With their high income, the passive losses on their rental were suspended every year.  This year they sold.  Not only a loss on the property, but also all those suspended passive losses released.  Dropped their income down to a level where they actually got their child tax credits as well.  That is how you generate a 20K refund in 1 year.  And I am damn glad for them as well.  They have been my clients since I started my practice 17 years ago.  I remember when they got married, right after she graduated from college and started teaching.  They worked hard, do everything right, get great jobs, and get screwed out of credits and deductions because they are successful.  They could have walked from their mortgage when the recession hit, but they did not.  Solid people doing the right thing.  When I sent them the return, I got a 1 word reply "WOW".  This is when I love my job.

Tom
Newark, CA

[RitaB]

11 minutes ago, BulldogTom said:

They worked hard, do everything right, get great jobs, and get screwed out of credits and deductions because they are successful.  They could have walked from their mortgage when the recession hit, but they did not.  Solid people doing the right thing.  When I sent them the return, I got a 1 word reply "WOW".  This is when I love my job.

Tom
Newark, CA

This is beautiful.  Day made.  I could hug you, Tom.

[Catherine]

18 minutes ago, RitaB said:

This is beautiful.  Day made.  I could hug you, Tom.

But NOT the back yard kind of hug!

[RitaB]

8 minutes ago, Catherine said:

But NOT the back yard kind of hug!

Never.  Not my Tom.  Or any of my tax buddies here.  You get real hugs not designed to measure for graves.

[Lion EA]

Oh, I love when my couple who's been adding huge amounts to their withholding for years, due to those situations with all the phaseouts and extra taxes to fund Obamacare, finally get a big refund once in a while.  I was thinking about the thief that stole my identity and made up a bunch of dependents and got every credit imaginable that all of us paid for with our honest tax dollars.

[JohnH]

2 hours ago, RitaB said:

Never.  Not my Tom.  Or any of my tax buddies here.  You get real hugs not designed to measure for graves.

Whew!  Now I can live without that fear hanging over my head. 

 

[SaraEA]

To everyone whose clients got IRS letters (and/or state letters), I think this means the new identity theft filters are working.  We have had two clients get these letters from IRS this season, and in both cases a return had already been filed and IRS suspected something and was writing to verify.  Neither taxpayer had filed yet, so those filters did what they were designed to do.  The clients called IRS and had some difficulty proving they were the real taxpayer, but then were treated like royalty--thanked profusely for saving the agency so much work and given instructions on how to file their returns.  Apparently the thieves, who are mostly organized international criminal gangs at this point and have loads of manpower and money, actually file fake W2s before they file the fake return.  IRS has to go to employers to verify that so-and-so is really on the payroll, cross check state records for dependents, etc.--time consuming research. 

It is not very clear in the letters that another return was filed, just a sentence buried somewhere that if they didn't file yet to call or write.  If your clients already filed, realize that the IRS letter was likely generated a few weeks ago so the letter is questioning the first return they received.  (The real return was accepted because the account had been put in limbo.) While it may be a nuisance for your clients, it is saving all taxpayers bundles of money that would have been sent to thieves.  Beats last year when one of our clients who hadn't filed yet got a letter from IRS saying that they were adjusting his refund by $160k because he'd neglected to record his estimated payments.   Did they really think anyone would forget they paid in $160k?