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Need advice-Fraudulent return filed


artp

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Taxpayer’s spouse received a notice from the IRS showing a balance due of $4796 on a 2021 tax return erroneously filed under her name. They have  filed a joint return for the last 30 years. The 2021 return has NOT been filed. This was obviously a fraudulent filing. We have requested a transcript and copy of the fraudulent return. I have a power of attorney on file and have attempted to contact the IRS to get this straightened out, but of course cannot get through on the phone. Meanwhile, the clients are reporting the security breach and are applying for identity protection pins. I am in the process of preparing the 2021 return. When they get the protection pins, I will file the return. Are there any other steps that we should take to get this matter resolved?

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10 minutes ago, Pacun said:

You should have efiled on January 24th so that the next return is rejected. If someone else is filing for 2021 tax year, they will be enjoying the refund while you are waiting for PIN. 

 

How is that even remotely helpful if the client just received the notice and didn't know about the fraudulent filing until now?

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53 minutes ago, artp said:

Taxpayer’s spouse received a notice from the IRS showing a balance due of $4796 on a 2021 tax return erroneously filed under her name. They have  filed a joint return for the last 30 years. The 2021 return has NOT been filed. This was obviously a fraudulent filing. We have requested a transcript and copy of the fraudulent return. I have a power of attorney on file and have attempted to contact the IRS to get this straightened out, but of course cannot get through on the phone. Meanwhile, the clients are reporting the security breach and are applying for identity protection pins. I am in the process of preparing the 2021 return. When they get the protection pins, I will file the return. Are there any other steps that we should take to get this matter resolved?

Sorry, this isn't exactly what you asked about resolving the 2021 issue, but in addition to what they've already done, they should consider a freeze on credit with all 3 credit reporting agencies, obtain a credit report to verify no new credit using their names, make sure AV software is current and working properly, consider using MFA and change passwords to all financial-related accounts, check activity with banks and investments for any unusual activity.  Sorry, there was more I wrote but lost it when I exited to another screen and the editor didn't store my response like it usually does.  Follow this page: https://www.irs.gov/newsroom/taxpayer-guide-to-identity-theft

You should also go to the IRS site and compare the number of returns filed using your EFIN to what you've actually processed to make sure you haven't been hacked.

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16 minutes ago, Pacun said:

We are both assuming as to when the letter was received. 

 

Well, if the thief e-filed the day IRS opened the season, there's no way that the client instantaneously received a notice in the mail and could have known about this and filed that early as you suggested.

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3 minutes ago, jklcpa said:

Well, if the thief e-filed the day IRS opened the season, there's no way that the client instantaneously received a notice in the mail and could have known about this and filed that early as you suggested.

you are right. I went back to read and it is for 2021.

So, something is very odd. Are we sure that that letter comes from the IRS?  My clients who e-filed at the very beginning of the season have not received their bill from the IRS.

Knowing that most, if not all, of the fraudulent returns asks for refunds, the IRS either asks for more information or sends a letter and not a bill. Plus the IRS is not in a position of billing someone since they don't have the payroll information uploaded yet, unless they efiled a Schedule C with a lot of income.

If a return was filed already, you have no choice but to send it my mail so, send it before April 15 and your return will supersede the other return and your issue should be soften.  

 

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4 hours ago, artp said:

Taxpayer’s spouse received a notice from the IRS showing a balance due of $4796 on a 2021 tax return erroneously filed under her name. They have  filed a joint return for the last 30 years. The 2021 return has NOT been filed. This was obviously a fraudulent filing. We have requested a transcript and copy of the fraudulent return. I have a power of attorney on file and have attempted to contact the IRS to get this straightened out, but of course cannot get through on the phone. Meanwhile, the clients are reporting the security breach and are applying for identity protection pins. I am in the process of preparing the 2021 return. When they get the protection pins, I will file the return. Are there any other steps that we should take to get this matter resolved?

Hi.  Did you actually see the notice yourself?  Does the IRS contact information seem correct? Double check.  This is just too odd for a balance due notice to go out when a TP has until April 18th to pay.

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4 hours ago, Pacun said:

. Are we sure that that letter comes from the IRS? 

 

1 hour ago, beckster2010 said:

.  This is just too odd for a balance due notice to go out when a TP has until April 18th to pay.

I would go ahead and e-file and see what comes forth, as Pacun and beckster have suggested it is likely a scam.

 

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I would try to efile. If it goes through, then nothing has been filed. It is gets rejected, file police report, contact credit companies as suggested by Judy and mail the return to supersede the fake return and deal with situation with the IRS. 

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Thank you for sharing that.

The FTC used to have a free magazine/workbook-sized book to hand out to clients with identity issues, a thorough to-do list with large print, pictures, and step-by-step instructions with links and phone numbers. That great book is now obsolete. I think they have a smaller pamphlet. And, as Slippery listed, a wealth of information on their website.

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1 hour ago, Catherine said:

Show higher income for a mortgage application?

I thought of that, but they had filed jointly for 30 years. She said 2021 was filed under her name.  Was it S or MFS?  And, ususally 2 years of tax returns are needed.  It's beginning to look like a scam.

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Thanks for all the replies and suggestions. I agree that this is a very weird situation. I have never run across this set of circumstances before. Client is taking additional steps as suggested by responders to this post. Client does not have a computer, does not use any online financial apps on her cell phone, but I was informed that their granddaughter works as a medial transcriptionist working from home and does have all of their personal information on her computer. Thus, a probable source for a data breech. I use MFA and have checked my computer for data security.  The written notice she received appears legit with valid iRS phone numbers and address, but I am waiting for a reply to my request for a transcript to verify what the IRS has on file. The tax shown on the notice was calculated based on filing as single.

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3 hours ago, artp said:

their granddaughter works as a medial transcriptionist working from home and does have all of their personal information on her computer.

Every computer and every paper file is a possible source, placing unfounded blame on the graddaughter seems premature if not ridiculous.  Two friends have had the ID stolen.  Both were from a breach at a large medical facility.  Last week I had fraudulent charges on a credit card.  The only activity on that card for the past year has been ATT's monthly phone bill and Consumers Energy's monthly gas bill. 

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4 hours ago, artp said:

 I am waiting for a reply to my request for a transcript to verify what the IRS has on file. The tax shown on the notice was calculated based on filing as single.

You may have a long wait.  The fastest way to find out is to file the return electronically.  If the spouses SSN has already been used on another return, the IRS will reject the return and it will have to be mailed in.   

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48 minutes ago, Max W said:

 The fastest way to find out is to file the return electronically. 

That won't tell what the irs has on file, it just confirms that a return was filed.  If the return isn't completed, it's idiotic to efile a fake or incomplete return just to see if one has already been filed. 

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3 minutes ago, Slippery Pencil said:

That won't tell what the irs has on file, it just confirms that a return was filed.  If the return isn't completed, it's idiotic to efile a fake or incomplete return just to see if one has already been filed. 

No, we are suggesting to efile a complete return as soon as possible.  If it gets rejected, then mail it before April 15th so it supersedes anything filed previously. In addition, we have suggested to report it to authoriest/agencies.

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On 3/28/2022 at 12:09 PM, Slippery Pencil said:

That won't tell what the irs has on file, it just confirms that a return was filed.  If the return isn't completed, it's idiotic to efile a fake or incomplete return just to see if one has already been filed. 

Who said anything about filing an incomplete return.  The asker had tried get a transcript, but if the request was by mail it is going to take a long time.  Right now, under the current IRS backlog and long on-hold phone times, filing a complete return will either go through as normal, or be rejected and then the appropriate action can be taken.  

The tax return has to be filed anyway and with client in the dark, taking action will demomstrate to the client that the preparer is doing something for them rather than sitting on their "idiotic butt."

 

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