If you were a victim of tax identity theft, you likely had to mail a signed paper copy of your tax return for the year(s) affected along with Form 14039 (Identity Theft Affidavit). You may also have reported your identity theft to the Federal Trade Commission and placed a fraud alert with the three major credit bureaus. While you were able to take measures to detect and prevent future fraud using your identity, you were never allowed to see a copy of the fraudulent tax return that was filed using your identity to determine exactly what information was compromised, until now. The IRS has begun allowing victims of identity theft to request redacted copies of the fraudulent tax returns that were filed at the request of U.S. Senator Kelly Ayotte. In a letter dated 5/17/2015 to IRS Commissioner Koskinen, Senator Ayotte wrote that it was “deeply troubling that the IRS does not help victims by providing them with copies of the fraudulent returns so they can determine what information was stolen.” As a result, the IRS posted detailed instructions on their website on how you can request copies of fraudulent tax returns.
What started as a convergence project to assimilate lease accounting between U.S. GAAP and IFRS became a reality on November 11, 2015 as FASB Board Members voted 6-1 to send the standard for final drafting. Those impacted the most will be companies that work with leases as a key part of their business, however, the new accounting rules will affect any U.S. company that deals with leases. The lease overhaul will be the most significant since FAS No. 13 was released in 1976 and is expected to add trillions to balance sheets across the U.S.
Under the existing accounting model, leases are treated as either capital or operating. Capital leases are required to be capitalized and amortized while operating leases are not. Critics of the current model claim that operating leases result in “off-the-books” accounting as balance sheets do not reflect these lease obligations, which in some instances can be over many years and for billions of dollars. For example, at December 31, 2014, Chipotle Mexican Grill, Inc. (CMG) had operating lease obligations of $3.044 Billion whereas their balance sheet showed a mere $534 Million in total liabilities. The effect of adding Chipotle’s operating lease obligations to their balance sheet would increase its liabilities nearly sevenfold. Furthermore, the new operating lease requirements would significantly alter many key ratios including return on assets and debt to equity. It also could trigger violations of debt covenants with banks and other lenders.
Even though the accounting changes will be significant, they will not create any new obligations for companies; they merely change the way these lease obligations are reported. FASB Board Members are currently drafting the new standard, which is expected to affect public and private companies for fiscal years beginning after December 15, 2018 and 2019, respectively. Early adoption will be permitted and there is not expected to be any alternative recognition or measurement.
Chris Soderberg, CPA
The Federal Trade Commission (FTC) estimates as many as nine million Americans have their identities stolen each year. According to a 1/26/15, FTC press release, tax-related identity theft was the most common form of reported identity theft in 2014. The FTC received 109,063 complaints about tax identity theft, which accounted for almost one-third of the 332,646 total identity theft complaints. In fact, 2014 marked the fifth consecutive year that tax-related identity theft topped the list of complaints.
IRS Timeline of Responding to a Tax Identity Theft Case
Taxpayers usually are unaware of an identity theft until they receive a notice from the IRS indicating that multiple returns have been filed or they received wages from an unknown employer. The situation typically takes many months to correct, and some identity theft victims have experienced a year or more wait before receiving their refund. In an audit report dated 3/20/15, the Treasury Inspector for General Tax Administration (TIGTA) concluded, based on a statistically valid sample of 100 taxpayer identity theft accounts, that on average the IRS took 278 days to resolve identity theft cases.
Identity Protection Personal Identification Number (IP PIN)
In an effort to help victims, the IRS issued approximately 1.5 million Identity Protection PINs (IP PINs). 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. An IP PIN helps the IRS verify a taxpayer’s identity and accept their electronic or paper tax return. When a taxpayer has an IP PIN, it prevents someone else from filing a tax return with their SSN as the primary or secondary taxpayer (spouse).
The IRS sends a new IP PIN each December by mail. When a taxpayer receives a Notice CP01A, the IP PIN is located in the left column, last paragraph, which states: “Your assigned 20XX IP PIN is: _____.” Taxpayers who lose their IP PIN or don’t receive a new one can log into www.irs.gov through “Get an IP PIN” or visit “Lost or Misplaced IP PINs” for further information on how to retrieve it.
Taxpayers, who were assigned an IP PIN, must use it to confirm their identity on the current year federal tax return and any delinquent returns filed during the calendar year. A return e-filed with the taxpayer’s correct SSN, but an incorrect or missing IP PIN will be rejected until the taxpayer submits it with the correct IP PIN or files a paper tax return. If the same conditions occur on a paper filed return, the IRS will delay its processing and hold the refund until the rightful payee is determined.
Taxpayers are eligible for an IP PIN if they—
- received a Notice CP01A from the IRS containing the IP PIN;
- received a Notice CP01F from the IRS inviting them to apply for an IP PIN;
- filed last year’s federal tax return as a resident of Florida, Georgia, or the District of Columbia;
- reported identity theft to the IRS and received a Notice CP01 indicating that an identity theft indicator has been placed on their account; or
- were identified as a possible victim of identity theft by the IRS.
The IRS does not contact taxpayers by telephone, text message, or email to request personal or financial information. Some identity thieves use a stick—angry or threatening demands for immediate payment, while others use a carrot—a payment or refund will be mailed if the requested information is provided. Furthermore, first contact from the IRS will not be a phone call or email from out of the blue, but rather it will be through official correspondence sent via U.S. mail.
Suspicious online or emailed phishing scams can be reported to the IRS at email@example.com. For phishing scams by phone, fax, or mail, call 800-366-4484. IRS impersonation scams, which appear to be increasing, can be reported to the TIGTA at 800-366-4484.
The Internal Revenue Service has issued an official warning about charity scams in relation to the recent South Carolina flooding. “When making donations to assist flood victims in South Carolina and elsewhere, taxpayers should take steps to ensure their hard-earned money goes to legitimate and currently eligible charities,” said IRS Commissioner John Koskinen. “IRS.gov has the tools taxpayers need to check out the status of charitable organizations.” Unfortunately, this is not the first time that we’ve seen these type of scams occur during tragedies. We’ve seen them occur after the Haitian earthquake, Hurricane Isaac, and Super Storm Sandy.
The IRS is sharing tips for people who wish to help the flood victims through charitable contributions.
- Beware of charities with names that are similar to nationally known organizations. These phony charities usually have names that mimic legitimate charities.
- Before donating, use the IRS.gov search engine, Exempt Organizations Select Check, to ensure that the charity that you are contributing to is a reputable and qualified charity.
- If you have received emails soliciting disaster related contributions which you believe to be fraud, be sure to visit IRS.gov and follow the Report Phishing link to report the possible fraud.
- Do not give out personal information such as your social security number, credit card numbers, and bank account numbers.
- Do not donate cash. It’s hard to track cash for tax purposes and more difficult to confirm that you’re giving to a legitimate organization if you’re just handing over cash to solicitor on your doorstep.