In recent years, the IRS has stressed its commitment to protecting taxpayers from tax-related identity theft. As part of this commitment, the IRS enhanced the Electronic Fraud Detection System (EFDS).
In 2012, the EFDS detected 7.8 million potentially fraudulent returns. When the system flags a tax return, the IRS does not process the return and freezes any refunds until the taxpayer verifies his or her identity.
When a return is flagged, the IRS sends Letter 5071C or Letter 4883C to affected taxpayers to request additional information to continue processing the tax return. The taxpayer is instructed to:
- Obtain a copy of the past two years’ tax returns to provide specific information to the IRS.
- Call the Taxpayer Protection Line (TPL) at (800) 834-5084 or visit idverify.irs.gov.
The IRS representative and the website questionnaire will request specific information about the taxpayer’s return, such as filing status, dependent information, employer information, adjusted gross income and other personal and financial information that will help the IRS confirm the taxpayer’s identity.
Some taxpayers have had limited success with using the website questionnaire, and have resorted to calling the TPL.
After the taxpayer has verified his or her identity with the IRS, the IRS should process the return and send any refund due within four to six weeks. However, many taxpayers are not receiving their refunds within that time-frame.
Most of the taxpayers affected by this new initiative prepared and filed their own returns and were expecting refunds. Many affected taxpayers contacted a tax professional for help with this issue for several reasons, such as:
- Concern that the identity verification letter could be a scam
- Confusion about the letter’s purpose
- Uncertainty about their ability to accurately self-prepare tax returns
- Fear that they have a larger IRS compliance issue
Should you find yourself in such a situation, please call us at 201-947-8081 or 646-688-2807, or email us at email@example.com.
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