Initial Steps for Victims of Tax Related Identity Theft

As the 2016 tax season comes to a close, many taxpayers may have discovered they were victims of identity theft. Taxpayers often discover that they have been a victim of identity theft after they receive information that a tax return has already been filed using their social security number. If you are e-filing and a return has already been filed, your filing will likely be rejected. If the IRS suspects identity theft, you will receive Letter 5071C, which will request you verify your identity. Such verification can be completed online at

 After discovering that you have been a victim of identity theft, you should take multiple actions to protect your identity and correct any fraudulent returns with the IRS. It is recommended that you contact the FTC at and contact one of the major credit bureaus to place a fraud alert on your credit. If you have received a notice from the IRS or your attempt to e-file a return was denied, you should immediately contact the IRS. If your e-filing has been denied and you believe it is related to identity theft, you must complete Form 14039, Identity Theft Affidavit. Form 14039, a paper copy of your return, and any required payment of tax should be mailed to the IRS.

 If issues persist related to any fraudulently filed tax returns, additional information can be obtained from the IRS’s website,, or by contacting Vandenack Williams LLC.

© 2016 Vandenack Williams LLC
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New Identity Safeguards for 2016 Tax Returns (State and Federal)

For 2016, the Internal Revenue Service (IRS) and the Nebraska Department of Revenue (DOR) are taking steps to reduce tax-related identity theft, which has become a growing issue. For example, in 2013, the IRS identified almost $30 billion of fraudulent refund requests. While most of the efforts at the IRS will be invisible to the taxpayer, new login steps for e-filers of federal returns will likely be noticeable.

On the state level, each state is taking different procedures to prevent tax-related identity theft. In Nebraska, the DOR will request further information from taxpayers who elect to use the e-filing system. The DOR will ask for a driver’s license or similar state issued ID card during the e-filing process. This additional identity information is voluntary and a tax return will be processed if it does not contain this information, however, it may take longer to process in order to ensure that the return is not fraudulent.

When filing, if the IRS or DOR notes that you have filed more than one tax return, or the records indicate work income from an employer you did not perform work for in the tax year, or you somehow have an abnormal taxing event, steps should be taken to determine whether you are a victim of tax-related identity theft, to prevent further damage.

 © 2015 Vandenack Williams LLC
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New Law Requires IRS to Use Private Debt Collectors

Private debt collectors are now likely to take a more active role in the collection of federal tax debts. New law recently amended IRC § 6306 to require the use of private debt collectors when: (1) the tax debt is not being collected because of a lack of IRS resources or the IRS cannot locate the taxpayer; (2) More than 1/3 of the statute of limitations has lapsed and no IRS employee has been assigned the collection; and (3) in the case of a collection that has been assigned to an IRS employee, but more than 365 days have passed without interaction with the taxpayer or a third party for furthering the collection.

A private debt collector may not be used when (1) there is a pending or active offer-in-compromise or installment agreement; (2) it is an innocent spouse case; (3) the taxpayer is deceased, under 18, in a combat zone, or a victim of tax-related identity theft; (4) the taxpayer is under examination, litigation, criminal investigation, or levy; or (5) the debt is in the process of an appeal.

Taxpayers should be aware of the procedures and the restrictions on these private debt collectors. If a tax debt is turned over to a private debt collector, the taxpayer will receive a letter notifying them of the outstanding debt and that it is being turned over to the debt collection company. In addition, the debt collection company will not be able to accept payment over the phone as the IRS will continue to process payments. As private debt collectors, these debt collectors will be subject to the Fair Debt Collection Practices Act. The Fair Debt Collocation Practices Act prohibits debt collectors from engaging in certain abusive or deceptive conduct. If the private debt collector violates the Fair Debt Collection Practices Act, the taxpayer may be able to recover damages. Nevertheless, taxpayers should remain vigilant and informed regarding tax scams as the increased involvement of private debt collectors may give rise to new scams or related issues.

© 2015 Vandenack Williams LLC
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