ID Theft Information for State Tax Agencies

1. ID Theft Information for State Tax Agencies WHAT states will get and WHERE they will find it July 2013

2. Objective: To learn about the ID theft information states will find on two GLDEP extracts: IMF Identity Theft Protection Indicator (ITPI)

3. 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

4. Identity Theft Protection Indicator (ITPI) Extract Basics • What is it? • Who gets it? • What about (d) cities?

5. ITPI Basics – cont’d • How are individuals placed on a state extract? • Can an individual be on more than one state extract?

6. 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

7. 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

8. 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

9. 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

10. 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”

11. ID Theft Info by Record Layout

12. ID Theft Info by Record Layout - cont’d

13. A Few Case Studies – Starting with Ralph Ralph 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 account The State of “X”, his residence, gets both extracts. Ralph files a single Federal tax return.

14. Ralph and the State of “X” Both extracts will include ID Theft Protection Indicators ITPI IMF

15. 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

16. Linda’s Lost Wallet - cont’d IMF extract IMF positions 585 through 592 – “0”’s Linda’s husband has no ID Theft issues No ID Theft info on secondary TIN ITPI

17. 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”

18. Maureen Mismatch - cont’d

19. 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

20. A Few More Points – cont’d • Do spec books explain ID theft conditions? • Do TDS transcripts include ID Theft Action Codes?

21. 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)

22. 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)

23. 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

24. 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)

25. 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)

26. 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

27. Now It’s Your Turn • Any Questions???

28. 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