ID Theft Information for State Tax Agencies

WHAT states will get and WHERE they will find it

July 2013

Objective:

To learn about the ID theft information states will find on two GLDEP extracts:

IMFIdentity Theft Protection

Indicator (ITPI)

Keep in Mind

The eight ID theft indicator fields on the extracts are the same

The taxpayers included on each may be different

ID Theft Indicators – taxpayers at risk for or impacted by ID theft

Identity Theft Protection Indicator (ITPI) Extract Basics What is it?

Who gets it?

What about (d) cities?

ITPI Basics – cont’d

How are individuals placed on a state extract?

Can an individual be on more than one state extract?

ITPI Basics – cont’d

How often will a state receive the extract? Monthly by SDT

June one week after 6/27 July one week after 7/26 August one week after 8/22

And so on through December – see the Spec book - page 8

ITPI Basics – cont’d

Is the extract cumulative?

Yes New names will be added to the extract If an individual’s address of record changes from one

state to another, the taxpayer will be dropped from the former state and added to the new state

A TC 972 (reversing the indicator) will also cause the name to drop from all extracts

ITPI Basics – cont’d

Is extract limited to individuals who filed returns? No. Extract includes:

all individuals identified by the IRS as potential or actual victims and

those who self reported risk of ID theft

IMF Extract ID Theft Protection Indicator Basics ID Theft Protection Indicator

Optional element for enrolled states and (d) cities Primary taxpayer only Extract does not include information about:

Secondary taxpayers or Dependents

States opting for SSN tickler will get ID theft information for out of state taxpayers

Down to Specifics

Where is the ID Theft Protection Indicator? ITPI Extract

Record Layout Positions 52 through 59 IMF Extract

Record Layout Positions 585 through 592

Condition present shown as “1” Condition absent shown as“0”

ID Theft Info by Record LayoutDescription ID Theft

Extract IMF Action Code Condition

Present Condition Absent

Return/W-2 TIN mismatch

52 585 525 1 0

Locked Account, TP deceased/no filing requirement

53 586 524 1 0

Potential Repeat ID Theft – questionable dependents

54 587 523 1 0

ID Theft claim - not yet verified

55 588 522 1 0

ID Theft Info by Record Layout - cont’d

Description ID TheftExtract

IMF ActionCode

ConditionPresent

ConditionAbsent

ID Theft – IRSidentified, taxadmin. Impact

56 589 506 1 0

ID Theft – DataLoss

57 590 505 1 0

ID Theft –Taxpayer SelfIdentified, no taxadmin impact.

58 591 504 1 0

ID Theft –Taxpayer SelfIdentified, taxAdmin. Impact

59 592 501 1 0

A Few Case Studies – Starting with RalphRalph contacted the IRS after he lost his wallet

and there is no tax administration impact.ID Theft Protection Indicator TC 971, Action

Code 504 is now on his accountThe State of “X”, his residence, gets both

extracts. Ralph files a single Federal tax return.

Ralph and the State of “X”

Both extracts will include ID Theft Protection Indicators

ITPI

IMF

0 0 0 1 0 0 1 052 53 54 55 56 57 58 59

0 0 0 1 0 0 1 0

585 586 587 588 589 590 591 592

Linda’s Lost Wallet

Linda also has a TC 971 Action Code 504

The State of “Y”, her residence, gets both extracts and has selected ID Theft info.

She files a joint return and is the secondary taxpayer

Linda’s Lost Wallet - cont’d

IMF extractIMF positions 585 through 592 – “0”’s Linda’s husband has no ID Theft issuesNo ID Theft info on secondary TIN

ITPI0 0 0 1 0 0 1 0

52 53 54 55 56 57 58 59

Maureen Mismatch

The IRS has identified a Return/W-2 mismatch condition

ID Theft Protection Indicator TC 971 Action Code 525 is now on her account

Maureen: Files single Federal return Lives in State “A” and (d) City “B” Works in State “C”

Maureen Mismatch - cont’dState/City IMF ITPIState A Yes YesState C Yes NoCity B Yes No (not yet)

IMF 1 0 0 0 0 0 0 0

585 586 587 588 589 590 591 592

ITPI 1 0 0 0 0 0 0 0

52 53 54 55 56 57 58 59

A Few More Points

Does either extract indicate assignment of IP PIN? No. The extracts do not include that information IP PIN’s are most likely if Record Layout Positions

are “1” 589, 592 (IMF) or 56, 59 (ITPI)

ID Theft Tax Admin Impact self or IRS identified

A Few More Points – cont’d

Do spec books explain ID theft conditions?

Do TDS transcripts include ID Theft Action Codes?

Ending at the Beginning IRM 10.5.3 Identity Protection Program TC 971 Action Code 522 starts the process

Taxpayer calls IRS on May 15, 2011, claiming to be a victim of identity theft for a 2008 audit assessment. The Customer Service Representative (CSR) requests the taxpayer respond to examination with identity theft supporting documentation and applies the TC 971 522 PNDCLM to the 2008 account. IRM10.5.3.2.6.1(3) (02-27-2013)

Ending at the Beginning - cont’dIRM 10.5.3 Identity Protection Program TC 971 may be reversed

A taxpayer alleging identity theft contacted IRS on February 2, 2012 regarding tax year 2009. The employee requested supporting documentation from the taxpayer. On May 1, 2012, the employee input a TC 972 AC 522 NORPLY as the taxpayer did not provide the documentation requested. 10.5.3.2.6.1(4) (02-27-2013)

Questionable Dependents

Action Code 523 Potential Repeat Identity Theft – Questionable Dependents IMF position 587 ITPI position 54

Details in IRM 10.5.3.2.13

Official Use Only

Substantiating Self Identified ID Theft The IRS affidavit, Form 14039, is accepted

from taxpayers in support of an allegation of identity theft. This form collects only the information necessary for taxpayers to attest to the IRS that they either have experienced or are at risk of harm from identity theft. IRS only accepts the IRS affidavit or a police report for substantiation purposes. 10.5.3.2.7(1)(b) (02-27-2013)

Self Identified – Tax Administration A taxpayer contacts AUR about a CP 2000

notice. In the course of working the case, AUR determines the taxpayer is a victim of identity theft. The victim provides AUR with supporting documentation. AUR will verify the taxpayer's address, take appropriate action and close the case with a TC 971 AC 501. 10.5.3.2.10(2) (02-27-2013)

But Wait – There’s More

Here are some functional IRM references on ID Theft: IRM 21.9.2, Specialized Accounts Management

Programs, Accounts Management Identity Theft. 21.3.4.31 (10-01-2012)

Identity Theft Overview

Now It’s Your Turn

Any Questions???

Conclusion

Thanks for attending this workshop

We hope you’re in a better position to answer questions your states may have on ID Theft Protection Indicator information