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March 19, 2018


IRS encourages tax preparation professionals to monitor EFINs

A group composed of the Internal Revenue Service (IRS), state tax agencies and businesses within the tax industry is working to address tax fraud. Thus far, the group’s efforts have proven successful. The efforts of the group translated to a 40 percent decrease in reported instances of identity theft in 2017 compared to reports from 2016.

This year, the group is pushing to increase awareness of flaws that could lead to future identity theft issues. One particular area of focus involves tax preparation professionals and EFINs.

How are tax preparation professionals at risk for tax fraud? A recent news release from the IRS explains that cybercriminals will attempt to steal Electronic Filing Identification Numbers (EFINs) from tax preparation professionals and post the information on the Dark Web. The information is then used by cybercriminals to file fraudulent tax returns.

How can tax professionals monitor and protect EFINs? The IRS offered a number of recommendations to safeguard this information. Three examples include:

  • Update wisely. Tax preparers should update EFIN applications within 30 days of any change. Examples of changes that would validate contact to the agency include changes to contact information such as address, phone number or email.
  • Review often. The IRS also recommends a regular review of EFINs. This review should include confirmation of the number of returns filed under their number. A discrepancy could signal an issue.
  • Take precautions. All tax professionals should avoid phishing emails and stay current on scams.

These proactive measures can help better ensure your practice and your clients do not become the victim of tax fraud by cybercriminals.

This is just one way you can protect you practice. On a related note, any practice that finds itself the subject of an investigation connected to allegations of fraud is wise to take the allegations seriously. An attorney experienced in these matters can help.