identity theft

IRS Acknowledges Identity Protection PIN Blunder

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Tax-News


The US Internal Revenue Service (IRS) has admitted that, due to an error, individual taxpayers are receiving Identity Protection Personal Identification Number (IP PIN) letters with an incorrect tax year listed.

The CP 01A Notice dated January 4, 2016, being sent by the IRS incorrectly indicates that the IP PIN being issued is to be used for filing the 2014 tax return, when the number is actually to be used for the 2015 tax return. Taxpayers and tax professionals are being advised that the IP PIN is valid for use on all individual tax returns filed in 2016.

The letters were mailed in late December, and taxpayers will be receiving them until mid-January. The IRS has apologized for the confusion and any inconvenience, and confirmed that it will begin accepting returns from taxpayers from January 19, 2016.

The IP PIN is a unique, six-digit number that is assigned annually to victims of identity theft with resolved cases, for use when filing their federal tax return. The IP PIN allows these individuals to avoid delays in filing returns and receiving refunds. When a taxpayer has an IP PIN, it prevents someone else from filing a fraudulent tax return with his or her Social Security number (SSN).

If a return is e-filed with the SSN and an incorrect or missing IP PIN, the agency’s system will reject it until it is submitted with the correct IP PIN or a paper return is filed. If the same conditions occur on a paper-filed return, the IRS will delay its processing and withhold any refund until it is determined if it is due to the proper taxpayer.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

IRS will share tax-filing info to fight identity theft

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate


When taxpayers hear that their tax information will be shared, they generally freak out, and with good reason. Almost daily we learn of some hacking incident in which personal data is obtained and then used to steal the victims’ financial identities.

The IRS has not been immune from such security breaches. Its own online transcript tool was compromised last spring. Tax-related identity theft topped the Federal Trade Commission’s consumer complaint list in 2014 and continues to grow.

Now, however, the IRS, along with state tax administrators and tax industry partners that make up the so-called Security Summit, say that sharing of taxpayer filing data will help stem tax identity theft and tax-return fraud.

The group, which was formed in March, has announced new security practices that will take effect with the 2016 filing season.

Share and share alike

One security move is ensuring that federal and state tax agencies, along with the tax industry that helps millions of individuals file their returns each year, have all the information they need to fight identity thieves.

In its work over the past 7 months, the Security Summit identified 20 new pieces of information that can be shared at tax-filing time with the IRS and states to help authenticate a taxpayer and detect identity theft refund fraud.

This information includes such things as repetitive use of Internet Protocol, or IP, numbers to transmit returns; identification data from computers from which returns originate; and the time it takes to complete a tax return, a potential indicator of computer-mechanized fraud.

States, tax industry responsibilities

Among those sharing this data will be e-file providers who submit 2,000 or more returns a year. These e-filing agents now will be required to research and analyze returns and then provide any potential identity-theft data to the IRS and the states.

State operating agreements also will include like-kind requirements for data-sharing and identity theft lead reporting to the IRS.

The goal here is to catch patterns of fraud and stop them before they become full-blown identity theft catastrophes.

The IRS, at the request of tax industry representatives and state tax offices, will act as the conduit for sharing the information with states via a secure data transfer process for the 2016 filing season. So far, 34 state departments of revenue and 20 tax industry members have signed on to part of the new information-sharing system, with more expected to sign later.

Regardless of what tax info is shared among preparers and tax agencies, you need to keep track of who’s looking at your personal data. You can do so through myBankrate.

Do you agree with the IRS and its tax-filing partners that the sharing of filer data will help stop tax identity theft? Or do you think it provides another avenue for private information to be hacked?

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Tax-Related Identity Theft Is Exploding – What Is The IRS Doing And What Can You Do?

While identity theft continues to present a great burden to businesses, organizations and governments including the IRS, it’s individual victims are left to bear the lions share.  In the past few years tax-related identity theft has become rampant.  Tax-related identity theft occurs when someone uses your personal information including your social security number to file a tax return and claim a refund.  The IRS paid out 5.8 billion in falsely claimed refunds in 2013.

For what it’s worth, the IRS has ramped up its efforts to combat identity theft.  Some of the steps the IRS is taking include:

  • Identify new steps to validate taxpayer and the tax return information at the time of filing, such as reviewing transmission of the tax return including improper and repetitive use of internet protocol numbers, internet address from where the return originated, computer device identification data tied to the return’s origin.
  • Sharing of suspected identity fraud information and analytics from the tax industry to identify fraud schemes and locate indicators of fraud patterns
  • Increased taxpayer communication regarding identity theft

But is this enough to protect against potential tax-related identity theft?   I don’t think so. Remember that in a tax-related identity theft typically the perpetrator has already obtained, from other sources, your social security number, birth date, address, etc.

This past filing season we have had the unhappy task of telling a handful of clients that they likely have become an identity theft victim.  When we electronically submit a return and the IRS rejects it because a return for the taxpayer has already been filed, this is a case of identity theft.

So here are some of the things you should do to protect yourself against identity theft.

Know the warning signs

  • You do not receive your refund within 20-30 days after filing your tax return.
  • You receive an IRS letter or notice in the mail that indicates that
    • You owe additional tax,
    • Your refund has been offset to pay for additional tax,
    • You have collection action taken against you for a year you did not file a tax return,
    • More than one tax return was filed for you,
  • You receive a call from someone claiming to be an IRS agent or officer.

Note that the IRS will never make contact with you via phone or e-mail.  The IRS only sends mail correspondence in order to communicate with taxpayers.


Reduce your risks

  • Don’t carry your social security card or any document with your social security number on it.
  • Do not give your social security number to someone just because they ask – unless it is absolutely necessary and you know who is asking and know they have a valid reason for asking.
  • Regularly check your credit report – possibly annually. A credit report can be obtained from, or call toll-free 1-877-322-8228, or by completing an Annual Credit Report request form and mail to: Annual Credit Report, Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
  • Review your bank and credit card statements regularly.
  • Protect your personal computers by using firewalls, anti-spam/virus software, update security patches and change passwords for internet accounts frequently.
  • Don’t give personal information over the phone or via mail unless you have initiated the call/correspondence or are sure you know who is asking.
  • Protect your personal financial information at home and on your computer, especially if you have roommates, employ outside help, or are having work done in your home.
  • Do not ever respond to any phone call, e-mail, text message, social media channels, or any type of electronic communication, from anyone claiming to be an IRS agent/officer. The IRS initiates contact with taxpayers by mail only. Contact us before you share any information with any individual claiming to be from the IRS or any other tax authorities.
  • If you are not currently affected by identity theft, but you may be at risk because your wallet/purse was stolen, or you have questionable credit card activity, contact the IRS Identity Theft Hotline at 1-800-908-4490.

Steps you should take if you do become a victim of identity theft

  • Contact us if you believe you have become a victim of identity theft.
  • Respond immediately to any IRS notice that you have received by regular mail (assuming you have received one).  Call only the number provided in the notice.
  • Contact IRS Identity Theft Hotline at 1-800-908-4490.
  • Complete and submit to the IRS, Form 14039, Identity Theft Affidavit.
  • Continue to pay your taxes and file your tax return even if you must do so on paper.
  • Contact your state tax authorities to see if identity theft has impacted your state tax filings.
  • Contact one of the three major credit bureaus to place a “fraud alert’ on your credit records:

Don’t become a victim of identity theft. Be aware that this is an exploding problem.  Protect yourself to avoid becoming an identity theft victim.

If you have any questions or concerns about identity theft, please contact us.

Herman & Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Larchmont NY, Rye NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Bronx, Manhattan, Greenwich CT and beyond.


Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.