In tax law, new rules can seem arbitrary and annoying, especially when what used to take only a few steps now requires many more. But with financial crimes on the increase, recent changes to the way you interact with the IRS may help keep your personal financial information safe. Here are four changes directly related to the prevention and detection of tax-related fraud.
- Get Transcript application security improved. Get Transcript is a web-based tool on the IRS site that you can use to look at and/or print a copy of your prior year tax information. You view the data in transcript form; that is, as a line-by-line listing instead of in the more familiar layout of tax forms. After a breach of the system in 2015, the IRS shut down Get Transcript. The application was re-opened this summer, using a new security process. You'll need your credit card number or account number from a loan, and a mobile phone with your name on the account in order to register. Alternatively, you can still request transcripts by mail.
- W-2 deadline moved up. The due date for filing paper and electronic Forms W-2, Wage and Tax Statement, with the IRS will be January 31. In the past, you didn't have to send these returns to the IRS until February (or March if you filed electronically). Moving the due date forward will give the IRS early access to income and withholding information and is expected to help reduce the amount of fraudulent tax refunds issued.
- Account locks on deceased taxpayers. You may have encountered this security measure if you're a personal representative. The IRS began the program in 2011 to prevent the payment of fraudulent tax refunds claimed using the name and social security number of deceased taxpayers. A taxpayer's account is locked when IRS files and Social Security Administration data both show a date of death. The purpose is to void tax returns filed using the social security number of a deceased taxpayer and prevent the issuance of a fraudulent refund.
- Limit on number of direct deposits of tax refunds. This rule became effective in January 2015, in response to fraudulent tax returns with refunds issued to the same address or bank account. The change limits the number of direct deposit refunds that you can send to a single bank account to three. Additional deposits are converted to a paper refund check that is mailed to your address of record.
For information on more new rules that will affect how you file your 2016 federal income tax return, please contact our office.
