IRS: Tax Preparers are Prime Targets for Identity Thieves

November 4, 2015

The IRS is reminding tax preparers that they are a favorite target for identity thieves looking for data to file fraudulent returns.

The Internal Revenue Service is recommending that tax preparers develop a security plan, which can be quickly executed in the event of a data breach. The agency provided the following checklist to help protect taxpayer information.

Safeguarding Taxpayer Data

As part of that security plan, the publication recommends preparers have:

  • Top-notch security software that includes a firewall, anti-malware and anti-virus programs; make sure they are set to automatically update so that the software can stay current against the latest threats; and consider having firewalls for both hardware and software.
  • An education program for all employees to ensure they understand the dangers of phishing emails and other threats to taxpayer data. Publication 4557 has several items related to employees such as halting their access to the preparer’s computer systems if they leave employment.
  • Strong passwords that are changed periodically; consider having different levels of password protection. For example, have one password to access the computer system and a separate password to access tax software or client files. That way, if the computer system is breached, perhaps not all of the information will be exposed.
  • Secure wireless connection. If Wi-Fi is used, protect taxpayer data by making sure it is password protected and encrypted email programs to exchange PII information with taxpayers.

Return preparers should also be sure to:

  • Back up taxpayer data frequently, perhaps on an external hard drive, and ensure that the hard-drive is kept in a secure location with limited access by others.
  • Store any paper files in a secure location.
  • Access IRS e-services weekly during the filing season and periodically throughout the year to see the number of returns filed using the preparer’s EFIN. If the number is excessive, contact the e-Help Desk for e-Services immediately.

Federal Laws Apply

Preparers also should be aware of the federal laws that require safeguards.
In the Gramm-Leach-Bliley Act, the “Safeguards Rule” requires individuals involved in providing financial products or tax preparation services to ensure the security and confidentiality of customer records and information.

The Act’s “Financial Privacy Rule” requires return preparers and others to give their customers privacy notices that explain the financial institution’s information collection and sharing practices. In turn, customers have the right to limit some sharing of their information.

Section 7216 of the Internal Revenue Code (IRC) imposes criminal penalties on tax preparers who make unauthorized disclosures or uses of information furnished to them in connection with the preparation of an income tax return.

IRC Section 6713 imposes monetary penalties on the unauthorized disclosures or uses of taxpayer information by any person engaged in the business of preparing or providing services in connection with the preparation of tax returns.

Develop Data Theft Plan

The IRS also recommends preparers create a data theft plan that they could enact should they experience a data loss.

The Federal Trade Commission outlines best practices for businesses that experience data theft. Its main guidance is available at “Information Compromise and the Risk of Identity Theft: Guidance for Your Business.” They include notifying:

  • Law Enforcement — If local police are not familiar with investigating information compromises, contact the local office of the FBI or the U.S. Secret Service. Also, contact local IRS Stakeholder Liaison so they can contact IRS Criminal Investigation.
  • Affected Businesses — For example, alerting the major credit bureaus that a data theft involving Social Security Numbers has occurred and that clients will be advised to place fraud alerts on their accounts.
  • Individual Clients — This is the hard part, but the earlier clients are notified, the faster they can take action to mitigate any damage. Also:
    • Discuss the timing with law enforcement to avoid impeding the investigation;
    • Designate a person responsible for releasing information. Communications is critical. The FTC has a model letter that can be used as a template to notify clients about the data theft.
    • Describe in any notice to clients what is known about the compromise, including how it happened, what information was taken and what actions have been taken to remedy the situation.
    • Consider additional steps such as offering free credit monitoring for clients.


The IRS has updated its guidance to preparers including new procedures should they suffer a data theft. Preparers should contact the IRS Stakeholder Liaison for their state. Contact information is available on, keyword search Stakeholder Liaison.

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Two days remain to complete EA and tax preparer continuing education requirements

December 29, 2014

Enrolled Agents and Annual Filing Season Program participants must satisfy all 2014 continuing education requirements before midnight December 31.

IRS Enrolled Agents and Annual Filing Season Program participants have two more days left to fulfill all 2014 IRS continuing education requirements. Valid PTIN holders have until 11:59 PM, December 31 to submit exams for continuing education credit. It’s not too late if you still haven’t registered for courses. Here are some links that will help you get started:

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Five personal income tax breaks up for vote in Congress

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December 16, 2014

The Senate must vote by tomorrow on whether to extend a variety of major tax breaks for individuals.

The U.S. Senate has until Wednesday to extend a large number of tax breaks affecting major portions of the economy. Extending certain provisions for individual taxpayers will be particularly helpful for people who are underwater on their mortgage, families with college students, teachers, or residents of certain states. The following are some of the tax breaks set to expire:

Untaxed mortgage write-downs. Having your underwater mortgage writen-down is technically income, but Congress had decided not to tax mortgage write-downs back in 2007.

Deduct tuition and education expenses. A vote is need to continue deducting up to $4000 in college tuition or education-related expenses for you, your children or your spouse.

Teachers can write-off up to $250 spent on school supplies. A vote will still be needed in order to continue this seemingly rather reasonable provision.

Use up to $245 in pre-tax dollars per month on public transportation. Without an extension, taking the bus or train will be a little less economical.

Use up to $245 in pre-tax dollars per month on public transportation. Without an extension, taking the bus or train will be a little less economical.


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CPE requirements: Continuing Education Requirements

Billionaire’s accountant says he smuggled millions into France

dassault rafale

Dassault Rafale (Photo credit: Wikipedia/airwolfhound)

November 21, 2014

Accountant claims he smuggled 53 million euros into France on behalf of French industrialist and politician Serge Dassault.

French accountant Gérard Limat is being investigated for his involvement in money laundering, illegal campaign financing and vote buying that allegedly took place while his employer, French billionaire Serge Dassault, was mayer of the Paris suburb of Corbeil-Essonnes between 1995 and 2009. Dassault, 89, is the CEO of Dassault Aviation, a French fighter jet manufacturer. Dassault had been ousted from the mayorship back in 2009 for giving monetary gifts to voters.

Limat says he smuggled in 53 million euros ($66 million) from banks in Luxembourg and Switzerland by transferring funds to a Swiss asset management company, who would make the funds available again in France. A representative from the asset management firm would allegedly meet with Limat near Dassault’s Champs-Elysées office to hand over bags containing 100,000 to 700,000 euros.

Source: Vice News

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AICPA urges Senate to approve automatic disaster victim tax relief

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November 19, 2014

American Institute of CPAs representative asks U.S. Senators to endorse legislation that would give disaster victims permanent and timely tax relief.

American Institute of Certified Public Accountants Tax Executive Committee chair Troy Lewis testified to the Senate Finance Subcommittee on Taxation and IRS Oversight that the current tax relief system often distributes tax relief differently to disaster victims in similar situations. Lewis contends that Congress should no longer consider tax relief benefits on a case by case basis, but instead automatically grant tax relief the same moment a disaster has been declared.

“By having a trigger mechanism in place, Congress allows the IRS to promptly issue notice of the available relief to the public and enables the IRS to program its systems appropriately,” Lewis said. “Under the current system, individuals and small business owners do not know what tax relief they will receive until Congress enacts legislation, sometimes months or even years after the event. The uncertainty surrounding such delayed relief impedes recovery.”

Lewis listed a total of recommendations that the AICPA believes should be given to taxpayers in FEMA disaster areas. “A set of standard disaster tax relief provisions will minimize the administrative burdens on the victims as well as the IRS,” stated Lewis.

Source: Accounting Today

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IRS Webinar Wednesday: RPO and PTIN Updates, AFSP Info

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November 11, 2014

The Internal Revenue Service will host a webinar on Wednesday to discuss new information for uncredentialed tax preparers, Enrolled Agents, and AFSP participants.

The IRS Return Preparer Office (RPO) is hosting a live webinar for uncredentialed tax return preparers and Enrolled Agents on Wednesday, November 12, 2014 at 2:00 pm ET. The primary topics will include: PTIN requirements and options for uncredentialed tax preparers, how to become an Enrolled Agent, how to participate in the Annual Filing Season Program (AFSP), and an overview of the upcoming online public directory of federal tax return preparers. Officials from the Return Preparer Office will host a live online Q&A session afterward.

PTIN numbers are not needed in order to participate. You can register by visiting

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‘Real estate guru’ admits to tax evasion

real-estate guru

November 4, 2014

Real estate investor who regularly appeared on CNN, CNBC and Fox Business will soon be on trial for money-laundering and tax-evasion.

Frequent radio and television news guest Tanya Marchiol is facing charges of money-laundering and tax-exasion related to her 2008 purchase of a home in Phoenix, Arizona. Marchiol, who is out on bail, has currently been legally banned from participating in any business activity related to her real estate investment firm, Team Investments, and is ordered to not provide any real estate or financial advice to the public.

Prosecutors claim that Marchiol accepted $140,000 from drug traffickers in order to purchase the home on their behalf. They say she then commingled the funds with funds from other clients, some of whom included unknowing professional athletes and other prominent figures. Documents show that Marchiol is the owner of the property and renting to the drug traffickers involved. Some of Marchiol’s real estate investment firm’s former employees have testified that she would launder money for profit.

Source: AZ Central

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2014 PTIN Renewal Starting for Tax Professionals


October 31, 2014

The IRS sent out reminders today to federal tax return preparers who must renew their Preparer Tax Identification Numbers (PTINs).

The IRS has reminded the nearly 690,000 federal tax return preparers nationwide today that current PTINs will all expire December 31, 2013. Anyone who prepares or helps to prepare a federal return or claim for refund must have a valid PTIN number to input on returns.

The PTIN system is now accepting applications for 2014 and the renewal fee is $63. Tools are available for PTIN holders who may have forgotten their user ID or password. Tax Preparers who already have a 2013 PTIN can renew online quickly and easily at

“We ask that you renew your PTIN as soon as possible to avoid a last-minute rush. It’s easy to let this slip as the holiday season approaches,” stated Carol Campbell of the IRS Return Preparer Office.


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Accountant paying city $75K for failure to uncover embezzlement


October 22, 2014

Accounting firm will pay city in North Carolina $75,000 for failing to discover over $500,000 in embezzlements.

Darrell Keller CPA of Kings Mountain, North Carolina has agreed to pay the town of Cherryville $75,000 in a settlement stemming from Keller’s failure to discover the embezzlement of over $500,000 by two former city employees. City finance director Bonny Alexander was convicted of stealing $435,000 over a six year period. Utility director Jennifer Hoyle has been accused of taking $92,000 in cash utility payments made by customers over four years. Keller has stated that the settlement is not an admission of wrongdoing and just not as expensive as taking the case to trial.

Source: The Times Picayune

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Account embezzled $540,000 from U.S. Navy subcontractor


(Photo credit: Wikipedia/Avjoska)

October 17, 2014

Accountant for a Louisiana based U.S. Navy subcontractor admits to embezzling $540,000 and could faces up to 50 years in prison and over $1M in fines.

Kim Parish of Picayune Mississippi pled guilty to multiple charges of bank fraud and wire fraud on Wednesday after she admitted to stealing over $540,000 from her employer. Ms. Parish forged signatures on hundreds of checks over a four year period and mislead the company’s payroll processing firm into writing her checks for false paid time off.

Parish’s employer, NOLA Computer Services, is a technology company and military subcontractor based in New Orleans. Because of the relationship, the Defense Criminal Investigative Service and Naval Criminal Investigative Service played roles in prosecuting her case. Parish faces up to 30 years in prison and $1M in fines for the charges of bank fraud, and up to 20 years and $250,000 in fines for wire fraud.

Source: The Times Picayune

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