How New Security Safeguards will Affect You for 2017

How will the new safeguards affect me?

The goal at the IRS is to verify your identity and the validity of your return before the return is accepted for processing. We’ve been working with state tax agencies and the tax industry to strengthen safeguards that protect you from identity theft. The 2017 safeguards are aimed at those of you who prepare your own federal and state tax returns using tax software.

• The IRS, the states and the tax industry will be sharing and analyzing data that will help us spot identity theft returns.
• There are multiple safeguards in place that don’t require you to do anything. We will do it all behind the scenes.
• You may experience some minor inconvenience in the way of an additional step or two, which are for your protection. For example, some of you may have to enter a 16-character code found on your Form W-2. This helps us verify the accuracy of the information. Or, those of you using a software product for the first time will need your 2015 adjusted gross income to complete the electronic filing process.
• Additionally, a new law passed by Congress requires the IRS to hold any refund claiming the Earned Income Tax Credit or the Additional Child Tax Credit until Feb.15. This is to give the IRS time to verify the accuracy of the return. Please note that due to the time it takes refunds to work through the banking and financial institutions, as well as weekends and holidays, people with these credits may not see their refunds until the week of Feb. 27.
• Also, some states may ask for driver’s license numbers as an additional authentication step. You do not need a driver’s license to file your federal return.

Why is my tax software asking for a “Verification Code?”

When you receive your Form W-2, you should review it to see if the “Verification Code” field has a 16-character combination of capital letters and/or numbers. This W-2 Verification Code is an initiative by the IRS that will appear on approximately 50 million Forms W-2. You (or your tax preparer) should enter this 16-digit code if it is on your W-2 when asked by your tax software. Failure to enter the code will not result in the rejection of your tax return. However, the IRS uses the verification code to help verify the information on your Form W-2. If there is no 16-digit code on your Form W-2, leave the software entry blank.

Do I need my prior year’s adjusted gross income to file electronically?

If you changed tax software products for the previous year, you may need your prior years adjusted gross income. Here’s the reason: Before you submit your return electronically, you must sign it electronically by creating a five-digit self-select PIN. To verify your signature, you are asked for your date of birth and either your prior-year adjusted gross income or prior-year self-select PIN. If you are a returning customer, your software product automatically generates that information. If you changed software products, you must enter that information yourself.

Where can I find my adjusted gross income if I do not have a copy of last year’s tax return?

You should keep a copy of your tax returns for at least three years. If you do not have a copy of your prior tax return, you should contact the tax software provider or tax preparer to get a copy. If that’s not an option, you may find your adjusted gross income on your tax transcript, which is a summary of your tax return. To view it immediately, register for Get Transcript Online. If you cannot verify your identity through Secure Access, you may have to request Get Transcript by Mail. For details, see Validating Your Electronically Filed Tax Return.

How will these safeguards affect my refund?

Although you may file your federal and state tax returns at the same time, they are processed separately. The tax software sorts the returns and sends the federal return to the IRS and the state return to the proper revenue agency. This is why you receive your federal and state refunds separately and at different times.

• The IRS anticipates it will issue nine out of 10 federal refunds within 21 days. However, refunds claiming EITC and/or ACTC must, by law, be held until February 15 and many will not see their refunds until the week of Feb. 27 due to the bank and financial processing and weekends and the Presidents Day holiday.
• You can easily track your federal refund at IRS.gov by using the Where’s My Refund? tool.
• Like the IRS, states are doing more to verify identities before issuing state refunds. In some cases, states may take extra time to ensure that you, not an identity thief, will receive a state refund.
• In some states, under certain circumstances, taxpayers who request direct deposit of a state refund will receive a paper check in the mail.
• Timeframes for state refunds will vary. For details, check your state tax agency’s website.

Why is my EITC refund being held?

Congress passed a law that requires the IRS to hold any refunds claiming the Earned Income Tax Credit or the Additional Child Tax Credit until Feb. 15. The IRS must hold the entire refund. The purpose is to give the IRS time to detect and prevent fraud. This means some refunds for some early filers may not be received until the week of Feb. 27. Where’s My Refund? ‎on IRS.gov and the IRS2Go phone app will be updated with projected deposit dates for early EITC and ACTC refund filers a few days after Feb. 15.

Do I need a driver’s license number to file a return?

You do not need a driver’s license number to file a federal return. Some states may request your driver’s license number for state tax returns because they have the ability to match state records and help confirm your identity. This is one more layer of protection against identity thieves. State tax software will prompt you for your driver’s license number if it is requested by the state. You also can review state revenue department websites for information.

Why am I being asked for my driver’s license number?

You do not need a driver’s license number to file your federal tax return. But, in an effort to better protect you from identity thieves, some states will be trying new approaches. Some states may ask for additional identification information, such as your driver’s license number when you are preparing your state tax return. This will be another layer of protection because identity thieves may already have your name and Social Security number, but perhaps not your driver’s license number. States requesting this information have the ability to match the driver’s license information and other identifying records to help confirm your identity.

What do I do if I think I am already a victim of identity theft?

Here are some warning signs of identity theft at the federal level:

• More than one tax return was filed using your SSN;
• You owe additional tax, have had a refund offset, or have had collection actions taken against you for a year you did not file a tax return;
• IRS records indicate you received wages from an employer unknown to you.

There are a variety of ways you may learn you are a victim and your response depends on whether the IRS tells you that you may be a victim or you tell the IRS. You may receive a letter from the IRS asking about a suspicious return with your SSN and asking you to verify your identity. Please follow the instructions in your letter. If you believe that you are a victim because your tax return rejected when e-filed because of a duplicate SSN (and you know there are no errors), you can submit Form 14039, Identity Theft Affidavit. Learn more at www.IRS.gov/identitytheft.

What information are you sharing about me?

Federal law has strong protections in place to protect personal tax information. Tax software providers are sharing with the IRS general tax return information and other data elements from the tax software that indicate potential fraudulent patterns occurring during return preparation. This is one more way the IRS, the states, and the tax industry can identify fraudulent tax returns that thieves file using your name and SSN.

Will sharing this data put my information at risk?

No. As part of the Security Summit, all participants agreed to use the National Institute of Standards and Technology cybersecurity framework, the highest standards for cybersecurity technology. The IRS, states, and most tax industry firms already met the NIST standards but now all software companies will adhere to it.

Also, information sharing is not related to the audit process. The IRS and states are looking for patterns indicating the return may be fraudulent and filed by an identity thief.

What if I have already been the victim of tax-related identity theft and use an Identity Protection Personal Identification Number (IP PIN)?

An IP PIN is a 6-digit number assigned to eligible taxpayers to help prevent the misuse of their Social Security Number on fraudulent federal income tax returns. Once the IRS sends you an IP PIN, you must use it to confirm your identity on your current tax return and any delinquent returns filed during the calendar year. The IRS will send you a new IP PIN by postal mail prior to the start of the filing season.

Continue to use your IP PIN to file any Forms 1040, 1040A, 1040EZ or 1040PR/SS, during the current calendar year. This includes any delinquent returns filed during the year. The IRS will provide you with a new IP PIN every year before the start of the tax season. Only use your most current IP PIN when filing your return. If you lose your IP PIN, you may retrieve it at Get an IP PIN tool, but you must verify your identity using the more rigorous Secure Access process. Learn what you need to be successful at Secure Access: How to Register for Certain Online Self-Help Tools.