The practitioner and taxpayer can be victims of data theft and not be aware of it. The following are some common clues that business information has been compromised.
Tax practitioners are locked out of their network computers, or their computers are responding unusually slowly.
Practitioners' computers are remotely accessed, and information changes without the practitioner touching the keyboard.
E-filed tax returns reject because Social Security numbers were already filed.
IRS authentication letters are issued to taxpayers who have not yet filed their tax return.
Clients receive refunds even though they did not file their tax return, or they receive tax transcripts that they did not request.
The practitioners EFIN has been compromised, and the number of tax returns filed using the EFIN number exceeds the number of clients for the tax preparer.
Respond and Recover from Data Breach
Tax practitioners who have been compromised should report thefts or losses of data to the IRS and their State Attorney General as soon as they become aware of the breach. It is important to act quickly to protect clients from having fraudulent tax returns filed using their information.
When a breach has occurred, the practitioner should report the data theft to the following:
The IRS and Law Enforcement
The practitioner should report the data breach to the local stakeholder liaison of the IRS. If directed by the IRS, report this breach to your local FBI office and local Secret Service office. The practitioner should also submit a report to their local police department.
Contact States in Which You Prepare State Returns
The tax practitioner must get information on how to report victim information to the states by emailing the Federation of Tax Administrators at www.StateAlert@taxadmin.org. The practitioner should also contact the State Attorneys General for each state where he has filed a tax return.
Security experts need to be contacted to assess the scope of the breach, determine the cause of the breach, how to stop it, and then how to prevent another.
It is important to contact the company’s insurance company to report that a breach has occurred and see if your policy covers the mitigation expenses associated with the breach of data.