Setting up firm procedures to fight identity theft.

• Author: Goldstein, Benson S.

The IRS provides much valuable information at its website about how taxpayers can take steps to counteract identity theft (see, e.g., the resources available at tinyurl.com/7pmgmnl). According to the IRS, identity thieves use a taxpayer's identity information to file a false tax return to obtain a refund, or the thieves may use a taxpayer's identity to obtain a job. Persons bent on fraud often choose the filing season as the perfect time to launch emails and make social media contacts with taxpayers. The IRS's website, which states that the IRS never uses email or social media to contact taxpayers directly, provides numerous telephone numbers and other ways for taxpayers to inform the government about identity theft or cybercrimes.

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While the government will continue to place its primary focus of stopping identity theft on the taxpayer, CPAs can implement a number of procedures within their accounting firms to prevent identity theft as well. According to a recent Tax Analysts article (Hoffman, "Practical Advice for Practitioners Combating Taxpayer Identity Theft," 135 Tax Notes 1453 (June 18, 2012)), tax professionals should start by educating their clients about identity theft. Danny Snow, a Memphis CPA and immediate past chair of the AICPA IRS Practice and Procedures Committee, told Tax Analysts that a practitioner's first step in counteracting identity theft problems is to maintain a clean office. His firm does not leave items in open view on desks, and it uses shredders to dispose of unneeded paper. Other tax professionals recommend locking drawers and prohibiting flash drives, which the article said are "easily concealed and stolen."

The Tax Analysts article recommends that tax professionals use encryption when...