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NYA Stakeholder Liaison Field IMRS Monthly Discussion Call Summary November 16, 2016

Topics Discussed:

Update on on-line CE Provider System
Current status of CE Provider system: On-line system unavailable
The IRS is in the process of transitioning to a new on-line CE Provider System.
The new CE system’s web address will be ceprovider.us and is expected to be
operational soon. Updates will be sent by email to CE Provider Points of Contact.
If you are an IRS Approved CE Provider and need assistance before the launch of
the new system, send an email to rpo.ce@irs.gov. If you make an emergency
request for a program number (a program taking place in the next 7 business
days), allow 2 business days for any approved requests to be processed. We may
contact you if we need additional information or have questions regarding your
request

IRS Warns Tax Professionals of New e-Services Email Scam
The Internal Revenue Service issued an urgent alert to tax professionals who use
IRS e-services to beware of an email asking them to update their accounts and
directing them to a fake website.
The subject line for the fraudulent email is “Security Awareness for Tax
Professionals.” The “From” line is “Your e-Services Team.” It has both an IRS
logo and an e-services logo that hyperlinks to a URL verified as a phishing site.
The spoofing site poses as an e-services registration page.
The scammers are attempting to exploit current IRS efforts to strengthen the eservices
authentication process and its ongoing communications with tax
professionals about their accounts. Scammers are attempting to steal e-services
usernames and passwords or additional personal data through a registration
page.

If e-services users have already clicked on the fake logo and provided their
username and password, they should contact the e-services help desk to reset
their accounts. If the same password is used for other accounts, these should be
changed as well. As an extra precaution, users should perform a deep security
scan on their computers, re-evaluate their security controls and be alert to any
other signs of identity theft or data compromise.
Tax professionals should always go directly to IRS.gov to access e-services and
never click on any links provided in emails.
Tax professionals who receive a suspicious email should send it as an
attachment to Phishing@irs.gov and then delete it. Recipients should not click on
any links.

The scammer email tells recipients that information was stolen from certain user
accounts in 2015 from a state-sponsored actor. It says users are being asked to
upgrade their e-service account to ensure protection of their information. It asks
them to click on the login to access their accounts for security upgrade.
The IRS is in the process of upgrading e-services security and has been in
communication with tax professionals about updating their accounts.
The IRS, state tax agencies and tax industry partners working together through
the Security Summit have an awareness campaign underway called Protect Your
Clients; Protect Yourself. The objective is to remind tax professionals they
increasingly are the targets of identity thieves seeking ever larger amounts of
taxpayer data to file fraudulent tax returns.
Security Summit partners recommend tax professionals:
• Always use robust security software
• Use encryption software to protect taxpayer data
• Use strong passwords and change them often
• Learn to recognize phishing emails attempting to steal data
• Never click on links or download attachments from suspicious emails
• Beware of any communications claiming to be the IRS that are outside
normal channels

Review Protect Your Clients, Protect Yourself for various steps you can take to
protect your customers’ information and your business.
Due Diligence Training Now Available Online
Congress recently expanded the EITC due diligence requirements to include two
additional refundable credits – the Child Tax Credit/Additional Child Tax Credit
and the American Opportunity Tax Credit.

Tax preparers can take a seminar presented at the 2016 Nationwide Tax Forums
to help navigate through the new procedures, the new form and the additional
refundable credits that have now come under the due diligence requirements.
For a fee, tax preparers taking the course can earn one continuing education
credit or can choose to audit the seminar free of charge.
Take the EITC Due Diligence Training Module online. This module covers the
technical parts of the due diligence must do’s and contains scenarios. Take
quizzes to test your knowledge as you complete the training. Then, pass the test,
and print a certificate of completion. You may also receive one Continuing
Education credit.

A new module including CTC and AOTC will be out on December 9, 2016.
Updated Training Coming December 9, 2016. Watch for and schedule time to take
the new training module, “Refundable Credits Due Diligence Best Practices
Training.” This training takes about an hour or so and you may receive
Continuing Education credit. This new module replaces the EITC Due Diligence
Training Module. We are updating the training so we cover not only the EITC, but
CTC and AOTC too. Watch our Hot Topics for Return Preparers page for
information on this and for more training opportunities.
Summit Helps Produce Successes in 2016 Against Identity Theft;
Victims Down by Half

The Internal Revenue Service, state tax agencies and industry partners today
finalized plans for 2017 to improve identity theft protections for individual and
business taxpayers after making significant inroads this year against fraudulent
returns.

Public and private sector leaders announced today that their collective efforts
through the Security Summit initiative have led to a marked improvement in the
battle against identity theft during 2016. This is highlighted by the number of new
people reporting stolen identities on federal tax returns falling by more than 50
percent, with nearly 275,000 fewer victims compared to a year ago.
At a Washington press conference, Summit leaders also detailed new and
expanded safeguards for taxpayers in the upcoming 2017 tax season. The 2017
focus revolves around “trusted customer” features that will help ensure the
authenticity of the taxpayer and the tax return – before, during and after a tax
return is filed. The additional protections will build on the 2016 successes that
prevented fraudulent returns and protected tax refunds.
“We’ve made remarkable progress this year in our efforts to protect taxpayers
following the unprecedented coordination with the states, the tax industry and
the financial sector,” said IRS Commissioner John Koskinen. “Working together,
this coalition has expanded its activities in many different areas, and we are
focused on strengthening our systems and processes even more for the
upcoming tax season.”

“It is gratifying to see how many different ways we have already identified and
begun to implement changes,” said Dawn Cash, Commissioner, Oklahoma Tax
Commission and President, Board of Trustees of the Federation of Tax
Administrators. “Taxpayers in states across the country are benefiting from this
important work.”
Summit Helps Produce Successes in 2016 Against Identity Theft; Victims Down
by Half

Security Summit initiatives put in place in 2016 had a dramatic impact on the
collective ability to identify and stop fraudulent returns. Key IRS statistics show
decreases because Summit efforts were successful at preventing fraudulent
returns from entering tax processing systems. This meant fewer bad returns,
fewer bad refunds and fewer taxpayers becoming victims.
Among the examples seen by the IRS:

• Identity theft affidavits fell sharply. The number of people who filed
affidavits with the IRS saying they were victims of identity theft dropped 50
percent during the first nine months of this year compared to 2015. The
number of new affidavits filed fell to 237,750 compared to 512,278 for the
first nine months of 2015.

• More fraudulent returns stopped before processing. IRS statistics show a
nearly 50 percent drop in the number of fraudulent returns that made it into
the IRS tax processing systems– another sign the Summit efforts are
working up front in the tax process. Through September of this year, the
IRS stopped 787,000 confirmed identity theft returns, totaling more than $4
billion. For the same nine-month period in 2015, the IRS stopped 1.2 million
confirmed identity theft returns, totaling about $7.2 billion.
• Fraudulent refunds fell. The number of bank partners grew to 620
institutions from 514 institutions in 2015, enabling internal processes to
continue improving. The number of suspect refunds stopped by banks and
returned to the IRS dropped by more than 50 percent, to 108,539 in 2016
compared to 243,361 in 2015, demonstrating our improved ability to stop
fraudulent returns before refunds are paid. The dollar amount of suspect
refunds dropped to $239 million from $829 million in 2015.
• Shared information stopped more bad returns. Industry and state partners
provided information that helped improve IRS fraud filters and stop
additional bad tax returns, including 57,000 that would have bypassed IRS
processing filters without Summit assistance.

• Shared data elements helped identify new areas. Several new data
elements shared on tax returns from Summit partners helped the IRS stop
over 74,000 suspicious returns, representing over $372 million in refunds
that were prevented from being paid.

“We’ve come a long way in a short time following the creation of the Security
Summit,” Koskinen said. “But much more work remains to be done, and the
partnership has agreed to take even more steps to protect taxpayers in 2017.”
More Steps Planned for 2017 Tax Season

For the 2017 filing season, the IRS and Summit partners will take additional
actions. As with 2016, many of the new features will not be visible to taxpayers
but will provide the IRS and states with the information they need to identify and
stop fraudulent identity theft returns.

Among the new or expanded features for 2017 that will protect taxpayers and the
tax system:

• New data elements transmitted by the tax industry with every tax return
have been updated and expanded. In all, 37 new data elements will be
added for 2017, providing additional information to strengthen the
authentication that a tax return is being filed by the real taxpayer.

• The tax industry will share with the IRS and states 32 data elements from
business tax returns – extending more identity theft protections to
business filers as well as individuals.

• More than 20 states are working with the financial services industry to
create their own version of a program that allows the industry to flag
suspicious refunds before they are deposited into taxpayer accounts. Also,
private sector partners are enhancing efforts to identify the “ultimate bank
account” to ensure that the refunds go into the true taxpayers’ accounts –
not fraudsters.

• The Form W-2 Verification Code initiative started by the IRS last year will
expand to 50 million forms in 2017 from 2 million in 2016. When completing
a tax return, the 16-digit verification code should be entered when
prompted by tax software used by both individuals and tax professionals to
validate the information on the Form W-2. The IRS anticipates the
verification code will be expanded in future years for all Forms W-2.
• The software industry will continue to enhance software password
requirements for individuals and tax professional users – providing
additional safety prior to filing.

Taken together, these “trusted customer” features will help the IRS and states do
an even better job of detecting fraudulent returns and protecting taxpayers.
As part of that effort, the Summit partners will launch a new Identity Theft Tax
Refund Fraud Information Sharing and Analysis Center, or ISAC. This project, in
its initial stages for 2017, will serve as an improved early warning system –
identifying emerging identity theft schemes and quickly sharing that information
among Summit partners so that all of the participants can enact safeguards.
Summit partners believe an ISAC ultimately promises significant gains in
detecting and preventing identity theft refund fraud and will provide better data to
law enforcement to investigate and prosecute identity thieves. This effort will
provide all Summit partners with a threat assessment capability, early warnings
about problems and insights about identity theft fraud schemes through nimble
and agile information sharing.

Education Campaign Continues for Taxpayers, Tax Professionals
The Security Summit will continue its campaigns to increase awareness about
data security to both taxpayers and tax preparers. Last year, the Summit partners
launched the “Taxes.Security. Together.” campaign to encourage taxpayers to
take greater data security precautions and to learn how to recognize and avoid
phishing emails that seek to trick people into providing sensitive data such as
Social Security or credit card numbers.

This year, the Summit partners expanded the campaign to include tax
professionals, who increasingly are being targeted by criminal syndicates.
Summit partners initiated a new campaign called “Protect Your Clients; Protect
Yourself” and urge tax professionals to use the best security practices available.
Tax professionals should review Publication 4557, Safeguarding Taxpayer Data,
to see an action check-list for ensuring data security.

As tax season approaches, the IRS and Summit partners will share more tips for
tax professionals in upcoming weeks. And for taxpayers, the
“Taxes.Security.Together” campaign will resume for a second year in the weeks
leading up to the opening of the 2017 filing season in January with important
information that taxpayers can use to protect their sensitive taxpayer and
financial data.

New Issues:
IRS Increasing Amount of Fees and Penalties- Practitioners are expressing
concern about the increased amount of fees and penalties that the IRS is
charging, Including:

• Cost of C.E. Credits (i.e. Due Diligence Online Course)
• Penalties for failure to file correct information returns and/or to furnish
correct payee statements have increased and are now subject to
inflationary adjustments. Information returns and payee statements
include, for example, Forms 1098, 1099, W-2G and W-2. See
https://www.irs.gov/government-entities/federal-state-localgovernments/increase-in-information-return-penalties-
2?_ga=1.8821941.1226921409.1430866404 for more information.
• Installment Arrangement Fees increasing
Concerns regarding Letter 5747C – This letter says that the IRS cannot help the
taxpayer over the phone or through the mail and that they must go in to an IRS
office before we will release their refund.
Additional information-The IRS is issuing this identity protection letter in
instances where there is a high potential for identity theft on original processing.
Included among those receiving this letter are those 70,000 plus individuals
whose identity may have been breached as the result of the hacked Get
Transcript incident. ID theft filters are employed to identify returns requiring in
person substantiation of identity, such as a new address. Taxpayers receiving
this letter are advised to follow instructions in the letter and visit their local
Taxpayer Assistance Center to authenticate their identity. For more on this, see
IRM 25.25.6.5.1

Special Update on IRS e-Services –

Over the next five weeks, the IRS will send letters to certain e-Services product
users who must either go online or call the e-Services e-Help Desk to validate
their identities. These letters will go to those users who can access the Transcript
Delivery Service and who have been active within the past year. To learn more
about who is affected, who must validate their identities and what is required,
please go to the e-Services main page at www.irs.gov/eservices. Users who
receive these letters will have 30 days to either authenticate their identities online
or call to authenticate by phone. Do not call the e-Help Desk unless you receive a
letter or your account is suspended. If you do not revalidate in time, your account
will be suspended for security purpose