Electronic filing rejection code could indicate identity theft
TAX ALERT |
Taxpayers who electronically file their tax returns and receive a rejection code of “R0000-902” should be aware that this rejection code indicates the IRS has already received a return for this taxpayer’s identification number. While this is frequently due to the taxpayer incorrectly entering their taxpayer identification number (social security number) on the return, if the identification number was entered correctly it could potentially mean that the taxpayer’s identity has been stolen.
A common tax-related identity theft scheme used by criminals is to file tax returns early in the filing season using false Form W-2 wage amounts and stolen social security numbers. Since the IRS has set a goal to process nine out of 10 refund requests for 2013 tax year filings within 21 days of the filing, the refunds are paid to the criminals prior to the IRS being able to verify the W-2 forms filed by employers, and prior to the actual taxpayer filing their legitimate return.
Another frequent scam that occurs is when criminals send false tax information to the IRS using a stolen taxpayer identification number and false filing address. The IRS will frequently issue system-generated notices that are mailed to the actual taxpayer’s mailing address. These notices could indicate that the taxpayer’s identity has been compromised. The IRS will never initiate correspondence with a taxpayer via email, text or social media, so any initial messages received in this format should be forwarded to email@example.com.
If a taxpayer believes that their identity has been compromised, they should immediately take the following critical actions to protect their identity, credit and tax filing status:
- Report incidents of identity theft to the Federal Trade Commission or call 1.877.438.4338.
- File a report with the local police.
- Notify the fraud departments of the major credit bureaus (Equifax, Experian and TransUnion) of the potential identity theft and fraud to begin appropriate account monitoring.
Regarding tax filing, after the return has been rejected for electronic filing by a “902” code, a taxpayer should complete Form 14039, Identity Theft Affidavit, and a copy of one of the following forms of identification should be attached to the form: (1) passport, (2) driver’s license, (3) social security card, or (4) other valid government or state-issued ID. This two-page form notifies the IRS that the filer has been the victim of identity theft and allows the IRS to process a paper-filed income tax return submitted with Form 14039.
For tax filings subsequent to the year in which the identity theft was identified, the IRS will issue an Identity Protection Personal Identification Number (IP PIN). The IP PIN will be used to file the subsequent period’s tax return in lieu of using a taxpayer identification number. Each year a new IP PIN will be issued to the taxpayer for use in filing all income tax returns. Taxpayers may also choose to call the IRS Identity Protection Specialized Unit at 1.800.908.4490 to report the fraud. Taxpayers who have received erroneous filing notices from the IRS or have not yet been the victim of identity theft but believe that an event has occurred which could compromise their federal tax records may also file Form 14039 to receive an IP PIN for future tax filings.
Recently issued guidance from the IRS shows that its identity theft protection and enforcement efforts have resulted in the identification of 14.6 million suspicious returns and stopped $50 billion in fraudulent refunds. Furthermore, in fiscal year 2013, the IRS increased its identity theft criminal investigations by 66 percent, which corresponded to criminal indictments doubling from the prior year. Taxpayers seeking additional information on identity theft can access the IRS’s Taxpayer Guide to Identity Theft.
This document contains general information, may be based on authorities that are subject to change, and is not a substitute for professional advice or services. This document does not constitute assurance, tax, consulting, business, financial, investment, legal or other professional advice, and you should consult a qualified professional advisor before taking any action based on the information herein. RSM LLP, its affiliates and related entities are not responsible for any loss resulting from or relating to reliance on this document by any person.
RSM LLP is an Iowa limited liability partnership and the U.S. member firm of RSM International, a global network of independent accounting, tax and consulting firms. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party.
RSM®, the RSM logo, the RSM Classic logo, The power of being understood®, Power comes from being understood®, and Experience the power of being understood® are registered trademarks of RSM LLP.© 2013 RSM LLP. All Rights Reserved.This publication represents the views of the author(s), and does not necessarily represent the views of RSM LLP.
This publication does not constitute professional advice.