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IRS identity theft safeguards delay tax return processing and refunds

May 19, 2017

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By Brett Bissonnette, JD / LLM (Tax), CPA, CGMA, CFF
Tax Controversy Manager

The IRS recently implemented new security safeguards for the 2017 filing season. While the goal is to protect taxpayers from identity theft, the side effects of these safeguards include delays in processing returns and delayed issuance of tax refunds.

Unfortunately, it appears that an increasing number of taxpayers have been subjected to verification requirements implemented by the IRS as part of these security safeguards. These verification procedures require taxpayers to provide data to ensure that returns were filed by those persons. In prior years, our experience has been that most taxpayers were allowed to verify their identity with a telephone call to the IRS. This year, however, a greater number of taxpayers are being asked to verify their identity in person. This often results in a significant time commitment in order to meet the IRS’s requirements.

If you receive a letter from the IRS notifying you that your return requires verification, you can either contact us, or contact the number listed on the correspondence. If the letter you receive indicates that you must appear in person, we would suggest calling the contact number listed on the letter, and request that the IRS allow you to verify your return by telephone. While the IRS may require in-person verification despite your request, making the request may save you time if you are allowed to verify your return by telephone. Typically, IRS verification requires you to provide tax return information from the most recent prior-year return, and information about your personal history.

Fortunately, the new security safeguards do not require verification for most taxpayers. Nonetheless, many taxpayers have been affected by the new safeguards in other ways. The IRS has sent out many form letters (Letter 4464C), which typically include an introductory statement similar to the following:

“We received your income tax return and are in the process of conducting a thorough review of your return information. This review is part of an ongoing program the IRS conducts to ensure the accuracy of tax return information.”

The Letter 4464C bears a distinctive stamped signature from the “Integrity & Verification Operations Program Manager, I&VO,” which appears similar to the one as follows:

INTEGRITY & VERIFICATION OPERATIONS

If you receive a Letter 4464C (letter numbers are listed in the upper right hand corner of the first page) from the IRS that bears the above stamped signature, chances are the correspondence is legitimately sent by the IRS. If you receive such correspondence, please be aware that there are likely to be delays associated with the processing of your return, but it does not mean that your return has been selected for audit. No additional steps are required on your part, unless directed otherwise by the IRS.

As always, if you have any questions about any correspondence you receive from the IRS, please feel free to contact us to discuss.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

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