Expiring ITINs and Tax Scams Aimed at Tax Preparers

January 6, 2017

As the 2017 filing season approaches we would like to remind you about some ITINs that need to be renewed and email phishing scams that are directed at tax preparers in order to take over their computer systems or to gain information in order to commit tax identity theft.

Expiring ITINs

This is a reminder that ITINs (Individual Taxpayer Identification Number) with the middle digits of either 78 or 79 expired at the end of 2016. An individual who has an affected ITIN will need to renew it in order to use it on a 2016 federal income tax return that will be filed during the 2017 filing season.

If an expired ITIN is used on a 2016 return the processing of the return will be delayed until that ITIN is renewed, which could take up to 11 weeks. This also could result in the denial of any deductions or credits associated with the expired ITIN.

To renew an ITIN the latest version of Form W-7 (revision date of September 2016) should be completed and submitted to the IRS. The IRS is encouraging affected individuals to submit an application as soon as possible since the application will take seven weeks to process (eleven weeks during the peak of the filing season).

See the IRS news release of December 21 - Many ITINs Expire Jan 1; Renew Now to Avoid Refund Delays for information on how to renew and information on what steps you need to follow in order to avoid delays in processing the renewal application.

For additional information see the following:

• IRS ITIN Expiration Frequently Asked Questions
• Form W-7 Instructions

Criminal Schemes Targeting Tax Preparers

As the 2017 filing season approaches it is important for tax preparers to be aware that tax identity thieves are now targeting tax preparers in their efforts to obtain their clients personal information and information related to the tax preparer themselves.

Here are two examples of how criminals are targeting tax preparers:

• Phishing emails are being sent to tax preparers with the subject line “Mails on Hold”. The email appears to originate from the IRS or E-Services and requests that the preparer validate their e-Services account information by clicking on a link in the email.
• Criminals are using remote access technology to gain control of preparer’s computers. They then use the preparer’s system to complete client tax returns (using the preparer’s tax software), file them with the IRS and then direct the refunds to their bank accounts. They also are able to gain access to the preparer’s clients personal information to then perpetuate tax identity theft. The IRS is still investigating how this occurs however one probable method is via phishing emails that ask the preparer to click on a link in the email to verify information.

For more information on what you can do to protect yourself see the following on the IRS website:

• IRS News Article of September 2, 2016 – IRS Warns of New Wave of Attacks Focused on Tax Professionals
• Protect Your Clients Tax Tip Number 2 of December 14, 2016 – Safeguarding Taxpayer Data – Avoid Scams
• Protect Your Clients; Protect Yourself
• IRS Security Awareness Tax Tips
• Tax Scams/Consumer Alerts