Farm Progress

For 2011, new IRS rules will require most tax returns to be filed electronically. If the return fails to pass through any of the filters or indicators, it will be kicked out of the normal IRS system and manually reviewed and verified by IRS personnel before processing. This will cause a delay in the processing of the return.

November 7, 2011

3 Min Read

Identity theft is one of the fastest growing crimes and tax identity theft is no exception. Victims of tax identity theft can experience substantial problems with obtaining a valid refund or with the processing of their returns.

In 2008, the IRS began using identity theft indicators and filters on the accounts of known tax identity theft victims.

These indicators help the IRS to:

· Distinguish between legitimate and fraudulent returns.

· Prevent recurring tax account problems for victims in successive tax years.

· Address problems experienced by victims.

Difficulties arise when a fraudulent return is filed before the victim’s legitimate return. IRS systems will process the first return received and accept the fraudulent return as the victim’s return. The IRS has now taken specific steps to prevent these problems for tax identity victims. Taxpayers should be aware of these recent steps.

For a taxpayer who has been identified by the IRS as a previous victim of tax identity theft, the indicators placed on the account and a series of filters are now used to determine whether a return is legitimate. When the IRS receives a return for a past victim, the return is matched against these indicators and filters before automatic processing to help the IRS determine whether the return is valid or fraudulent.

For 2011, new IRS rules will require most tax returns to be filed electronically. If the return fails to pass through any of the filters or indicators, it will be kicked out of the normal IRS system and manually reviewed and verified by IRS personnel before processing. This will cause a delay in the processing of the return.

In mid-November 2011, selected taxpayers with identity theft indicators on their accounts will receive a new IRS introductory notice letter (IRS Letter 4868CS) advising them that they will shortly receive a new Identity Protection PIN (IP PIN). Approximately one month later, IRS Letter 4869CS will follow, assigning a special new 6-digit IP PIN number to the taxpayer for the 2011 taxation year. This new IP PIN is an authenticator that must appear on the taxpayer’s 2011 tax return. This safeguard will allow the legitimate return to bypass the filters and expedite processing for the tax year.

The taxpayer will receive a new IP PIN for each successive taxation year that the identity theft indicator remains on their account.

Here is what farmers need to know in connection with the new IP PIN numbers:

· Save the IRS letters regarding the new IP PIN if you receive them. Do not lose the new number. If your return is electronically filed without entering the IP PIN in the designated place, the return will be rejected and a paper return becomes necessary. This will typically cause substantial delays in the processing of your return.

· Be sure to give the number to your tax preparer.

· If you and your spouse both receive the IP PIN letters, provide both sets to your tax preparer. The IP PIN of the taxpayer whose name appears first on the return will be used.

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