How Secure is Your Identity?

And what is the IRS doing to protect your identity?

For 2014 tax returns, the Internal Revenue Service (“IRS”) is utilizing a filtering system for flagging certain tax returns as “suspicious” and pausing the processing of these returns until additional identity verification is received. If your tax return is flagged, you will receive a written request (Letter 5071C) to answer additional questions to confirm you are the correct taxpayer for that return. To answer the questions, you have the option of calling a toll-free telephone number, or visiting Due to high call volume, the IRS highly recommends using the website for answering the questions. Once your identity is verified, the tax return will be put back into normal processing.

Another step the IRS is taking to counter identity theft is the expansion of its Identity Protection Personal Identification Number (“IP PIN”) initiative. Initially designed for confirmed victims of identity theft, the IP PIN is intended to prove the rightful taxpayer connected with a compromised Social Security number (“SSN”). To assist an affected taxpayer, the person is assigned a unique, six-digit number that is to be reported on the tax return as well as his or her SSN. In addition to confirmed victims, the IRS has identified numerous taxpayers as possible victims of identity theft and invited them to participate in the IP PIN program. Also, under a pilot program, taxpayers who filed 2013 tax returns from Florida, Georgia and the District of Columbia may voluntarily opt into the IP PIN program.

If you volunteer to participate in the IP PIN program, please be aware that this additional six-digit number is equally important as your SSN when filing and reporting your taxes. Also, keep a record of your number in a safe place, have it available at tax return filing time and notify the IRS of any changes to your name, address or filing status. Failure to use the IP PIN on an e-filed return will result in your tax return being rejected.

In relation to paper-filed returns, failure to use the IP PIN will result in inquiries and significant delays while the IRS attempts to validate your identity. Before voluntarily opting in to the IP PIN program, please consider weighing the benefits of limited protection for tax return filings with the potential burden of preserving and using the IP PIN.

If you have questions about the IP PIN program or what to do if you receive Letter 5071C, Cherry Bekaert is here to provide guidance. We take identity theft very seriously and work with our clients and our employees to help you from falling victim to this crime.

Outlined below are some of the precautions you can take, as well as practices and policies we have in place:

What can you do to protect your identity?

  • Be extremely cautious about sharing personal information (birth date, address, SSN, discussion of family members) with unknown people, whether in person, on the phone, or via email.
  • Protect your Personal Identification Numbers (PINs). Never write a PIN on a credit/debit card or on a slip of paper kept in your wallet.
  • Question anyone who asks for your SSN as to why they need that information, even if you know that person. SSNs are often requested, even though there is no legitimate need to do so.
  • If you must share your SSN, make sure the people or organizations you give it to have strong security measures in place to protect it. Make sure you initiate the call or website contact to the organization.
  • Beware of “phishing” and fraudulent representatives of government agencies. Do not reply to any suspicious emails or click on any links within such emails.
  • Do not respond to emails that have bad words, contain significant misspellings, are scary, or just seem weird.
  • Remember that the IRS never uses email or social media to contact you directly or to request confidential information. You will be contacted by mail and perhaps by telephone.
  • Store your Social Security card and tax returns securely, such as in a safety deposit box or locked file cabinet.
  • Do not carry your Social Security card or other documents that include your SSN in your wallet or purse, unless you will actually need it that day.
  • Collect your mail promptly. If you will be away for more than a day or two, ask the post office to put a hold on your mail.
  • Use passwords or encryption to protect your computer files that contain any personal information and change the password on a regular basis. Do not use any part of your SSN as part of a username or password that you establish.
  • Keep home computer software, firewalls and security patches up to date.
  • Make sure hard drives on computers that are thrown away, sold, or given to friends, family or charity, have been wiped clean or cleared of any sensitive data.
  • Shred any old tax returns, bank statements, other documents containing personal or financial information and expired credit cards before discarding. Generally, the IRS recommends saving tax return data for at least three years. We generally recommend maintaining business records for seven years.
  • Monitor your credit reports at least annually and consider placing a freeze on new credit under your account with the three credit bureaus.
  • Monitor your bank accounts and credit card accounts for unauthorized transactions.
  • Pay attention to billing cycles. If billing or financial statements are late, contact the sender.

What does Cherry Bekaert do to protect your identity?

  • Your tax returns or other personal information are not released to third parties without your signed written consent. We do this because it is good business, is required by our professional standards and complies with federal law to protect taxpayer information.
  • Our electronic portal is used for sending files to you (e.g., your tax return) and receiving files from you (e.g., broker statements). Because it utilizes advanced security and protection technology, we strongly recommend you use the electronic portal system for sending and receiving files containing your personal information.
  • We require using FedEx or UPS to obtain your signature for delivery of overnight packages that we may send to you. (If circumstances permit, you may authorize us in advance to have a package delivered without a signature.)
  • For your protection, all emailed documents that may contain SSNs are password protected.
  • Before updating your tax returns and our software systems, we confirm address changes and bank account changes with you.
  • SSNs from certain documents and your tax organizer that is mailed to you every January are redacted.
  • When filing electronically, your tax returns are not filed without your signature on the e-file authorization forms.
  • We continually update our own IT policies and procedures to better protect your identity.

What if you become a victim of identity theft?

Please call your Cherry Bekaert Tax Professional immediately and follow the steps recommended by the IRS for reporting this crime. We can assist you in notifying the IRS and registering with their IP PIN program. Our experience in assisting clients affected by identity theft can help you move through the recovery process as smoothly as possible and get your affairs back in order.