25.23.9. Business Master File (BMF) Identity Theft Processing

(1) Business Master File (BMF) Identity (ID) Theft can involve the use of business’s information to file fraudulent returns to support Individual Master File (IMF) ID theft or to obtain refunds from BMF accounts. A person can use an individual's stolen personal information to obtain an Employer Identification Number (EIN) to file false BMF tax returns and income documents. BMF accounts include the following entity types: sole proprietorship, limited liability company (LLC), corporation, partnership, estate, trust, exempt organization, or government entity.

(1) Policy Statement 10-1 (formerly P-25-1), IRM 1.2.1.17.1, Assisting taxpayers who report they are victims of identity theft. The Internal Revenue Service shall take the necessary steps to provide help to victims of identity theft within the scope of their official duties. Where appropriate, the Internal Revenue Service shall encourage victims to report instances of identity theft to other Federal agencies. The Internal Revenue Service recognizes the need for consistency across its functions to ensure the timely resolution of taxpayer account issues stemming from identity theft. In addition, identity theft victims shall be advised of the impact, if any, on their future filing requirements.

(2) The Taxpayer Advocate Service is an independent organization within the Internal Revenue Service (IRS), led by the National Taxpayer Advocate, that helps taxpayers and protects taxpayer rights. TAS offers free help to taxpayers when a tax problem is causing a financial difficulty, when they’ve tried and been unable to resolve their issue with the IRS, or when they believe an IRS system, process, or procedure just isn't working as it should. TAS strives to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights. TAS has at least one taxpayer advocate office located in every state, the District of Columbia, and Puerto Rico.

(1) Any employee who handle cases where the taxpayer says they are a victim of BMF ID theft, or the employee identifies BMF ID theft is responsible for following the procedures set forth in this IRM.

(1) Acronyms

• AMS- Accounts Management Services

• BITR- BMF Identity Theft Research

• BMF- Business Master File

• BOD- Business Operation Division

• CC- Command Code

• CCC- Computer Condition Code

• CI- Criminal Investigation

• CII- Correspondence Imaging Inventory

• EIN- Employer Identification Number

• IDT- Identity theft

• IMF- Individual Master File

• IP - Identity Protection

• IPSO- Identity Protection Strategy and Oversight

• ITIN- Individual Taxpayer Identification Number

• LLC- Limited Liability Company

• OAR-Operations Assistance Request

• PII- Personally Identifiable Information

• RICS- Return Integrity and Compliance Services

• SFR- Substitute For Return

• SLA- Service Level Agreement

• SP- Submission Processing

• SSN- Social Security Number

• TAS- Taxpayer Advocate Service

• TBOR - Taxpayer Bill of Rights

• TS- Taxpayer Services

(2) Definitions

• Fabricated EIN- This is an EIN established for the sole purpose of defrauding the government by the filing of tax returns or used for other illicit activities not related to the filing of federal tax returns or other forms. The associated Personally Identifiable Information (PII) may be stolen personal data.

• Inactive EIN- An Inactive EIN belongs to a legitimate business whose business operations have ceased.

• Tax impact- The ID theft has caused a direct effect to the taxpayer’s account. This can include the filing of fraudulent tax returns or income documents.

• Non-Tax impact- The business’s information has been stolen but currently there is no direct effect on the taxpayer’s account.

• Fraud- Fraud is when a true owner of the EIN or authorized party tries to file false tax documents to receive a refund, reduce a tax liability, or receive other tax benefit to which they are not entitled.

• BMF Identity Theft- is defined by the filing of a Business Tax Return when someone creates, uses, or tries to use a business's or individual's identifying information without authority to obtain tax benefits.

(1) IRM 25.23.1.6, Data Breach Business Entities

(2) Federal Trade Commission - https://www.identitytheft.gov

(3) Social Security Administration - www.ssa.gov

(4) BMF Identity Theft Research (BITR)- BITR Tool

(1) If the taxpayer says they are a victim of ID theft and research determines there is no tax related impact from the theft, guidance will be provided to the taxpayer as to what actions they may want to take.

(2) If the business has experienced a breach of employee or client data, and the taxpayer is seeking help for their employees or clients, see IRM 25.23.1.6 (1)Data Breach- Business Entities Whose Employees or Clients PII was Breached.

(3) If the taxpayer has been a victim of a data breach, see IRM 25.23.1.7, Taxpayers who are Victims of a Data Breach. Advise the taxpayer to complete a Form 14039 only for IMF Tax related issues. A Form 14039 is not needed for BMF ID theft.

(4) If the taxpayer is seeking advice for the business, ask the taxpayer as to the type of information breached:

1. If a business or payroll company contacts the IRS to report a data loss which includes Forms W-2 information, advise them to go to IRS.gov and search using key word "Identity Theft”. Click on “Identity Protection: Prevention, Detection and Victim Assistance”. In the chart under “Businesses” click on “Form W-2/SSN Data Theft: Information for Business and Payroll Service Providers”. This link provides the information on various agencies and how to contact them to report the loss.

2. If a business or payroll company contacts the IRS to report a theft in their office that could potentially lead to a data breach but does not include Form W-2 information, advise them to contact their local stakeholder liaison. The stakeholder liaison listing can be found on irs.gov, search keywords “Stakeholder Liaison” then click on “Stakeholder Liaison Local Contacts IRS”. The liaisons are listed by state. The liaison will notify CI and other functions on their behalf. Advise the caller that they need to contact the liaisons as quickly as possible so the IRS can take steps to prevent the filing of fraudulent returns.

3. Advise the taxpayer they may want to contact the Federal Trade Commission or the Social Security Administration at:

Contact	Web Address	Contact Number
Federal Trade Commission (FTC)	https://www.identitytheft.gov	877-438-4338
Social Security Administration (SSA)	www.ssa.gov search “Identity Theft”	800-772-1213

4. Advise the caller they may want to contact one of the major credit bureaus. They may be able to help them in obtaining information needed to pursue issues relating to the loss of the business’s PII information.

Credit Bureau	Web Address	Contact Number
Equifax	https://www.equifax.com/personal/	800-525-6285
Experian	http://www.experian.com/business-services/business-services.html	888-397-3742
TransUnion	https://www.transunion.com/business	800-680-7289

5. Advise the taxpayer they may want to file a report with their local or state police and contact their State Attorney General’s office. Provide the web site information for a list of State Attorney General, https://www.naag.org/

6. Provide the taxpayer the irs.gov website advising them to search for “taxpayer guide to identity theft” to obtain more ID theft information.

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(4) There will be an open control assigned to 1481055555, with a category code of TPPI and a history showing potential IDT. If a paper case is received that meets the criteria above Accounts Management employees use IRM 25.23.11.6.3, BMF Returns Selected for RICS Review. All other employees follow your business unit’s functional procedures.

(5) For returns selected under a RICS BMF program, RICS sends Letter 6042C, Entity Verification for Businesses, to verify the business entity. If there is an X-REF SSN showing on CC BMFOLE, a letter will also be sent to the X-REF. If there is no X-REF, the letter will only be sent to the address shown for the business.

(6) If a TC 971 AC 711 posts, that return is suspended. The TC 971 AC 711 will cause the return to post as a TC 973, and it will remain suspended until the taxpayer validates the return. The TC 971 AC 711 can be generated by:

1. The return being caught in a filter or

2. The return contains a Computer Condition code (CCC) of E

(7) The TC 973 return will be suspended for up to three years from the TC 973 posted cycle. If the return is not validated within that three-years, it will be deleted from the suspense file.

(8) If a TC 971 AC 711 posted suspending the return and a second return is filed that does not hit the filters, it will post as a TC 150. If a second return is filed and it also hits the filters, a second TC 973 will post to the account. There can be more than one TC 973 on the module.

(9) If RICS determines that the selected return is not IDT, RICS will take appropriate account actions. If a TC 971 AC 711 posted suspending the return, a TC 971 AC 712 with corresponding DLN of the TC 973 is input allowing that return to post. If a TC 971 AC 522 posts indicating return selected, RICS will reverse as applicable.

(10) If RICS determines that the selected return is not IDT but there are questionable Frivolous or fraudulent items, RICS will take appropriate account actions to refer the case to either FRP or SBSE for further review. If a TC 971 AC 522 indicating return selected is present, RICS will reverse as applicable and notate case referred to other area for review.

• If referring to FRP, and a TC 971 AC 711 posted suspending the return, a TC 971 AC 713 with corresponding DLN of the TC 973 is input allowing that return to post and freeze any refund with a TC 810 (-Q freeze) RC 4.

• If referring to SBSE, and a TC 971 AC 711 posted suspending the return, a TC 971 AC 717 with corresponding DLN of the TC 973 is input allowing that return to post and freeze any refund with a TC 810 (-Q freeze) RC 8

(11) If a TC 971 AC 711 post suspending the return and the return was deleted from the suspense file, RICS will reverse the TC 971 AC 711 if they determine it is not IDT and:

1. If the return was electronically submitted, the EUP return will be printed and sent to be processed as paper using the original receive date

2. If the return was paper, the paper return will be secured and sent for processing using the original received date.

Reminder: In both situations, the original DLN will be crossed out on the return for processing to assign a new DLN.

1. Return was selected by filters and a TC 971 AC 711 is generated on the account.

2. BMF sees the TC 971 AC 711 and posts the return as a TC 973. The return is placed into suspense on the SCRS (Service Center Replacement System) for three years.

3. Taxpayer doesn’t respond to the letter sent.

4. Three years after the TC 973 posted cycle, the return is deleted from the suspense file.

1. Return was selected by filters and a TC 971 AC 711 is generated on the account.

2. BMF sees the TC 971 AC 711 and posts the return as a TC 973. The return is placed in suspense on SCRS.

3. Taxpayer validates the return within three years from the TC 973 posted cycle and a TC 971 AC 712 is input with the DLN of the TC 973 it is reversing.

4. Return posts as the TC 150 and refund released.

(12) If the taxpayer calls about a notice requesting a return to be filed but original return is being held for RICS review or letter pending RICS review, then Accounts Management employees will follow IRM 25.23.11.6.3 , BMF Returns Selected for RICS Review. All other employees follow your business unit’s functional procedures.

(1) Identity thieves sometimes use the personally identifiable information (PII) of individuals to establish fabricated businesses. Many times, the fabricated business is used to support the filing of fraudulent IMF returns.

(2) If the taxpayer calls advising they received correspondence relating to a BMF ID theft issue and claims to have no affiliation with the business, take the proper steps to ensure ID theft has occurred. DO NOT advise the caller to submit a Form 14039 on any IMF or BMF toll free line claiming possible BMF ID theft.

(3) If the taxpayer does file a Form 14039 to advise the IRS of ID theft relating to a business/BMF issue, the receiving BMF CSR will send the proper acknowledgment letter.

(4) Employees will verify the IMF taxpayer’s association with the EIN and determine if potential BMF ID theft exists prior to marking the IMF account with a tracking indicator.

(5) Research MUST be completed to determine if there is a potential BMF ID theft issue prior to marking an account and referring or transferring the case/call to another area. Researching the account will allow for the employee to determine if the case should be referred to the BMF ID theft inventory or moved/transferred into the regular BMF inventory following normal procedures.

1. Research CC BMFOLE (the business entity module) to determine if the taxpayer’s SSN is associated with the EIN. BMFOLE contains a XREF-SSN field that will provide the associated SSN. The format for CC BMFOLE is:
   BMFOLEXX-XXXXXXX.

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(6) Once the research is completed and it is determined there is potential ID theft, research CC IMFOLE to determine if there is an existing TC 971 AC 504 SPCL2. If there is currently no ID TC 971 AC 504 SPCL2 marker, the SSN entity must be marked on CC ENMOD using CC REQ77 as shown in IRM 25.23.2.8.1.2, TC 971 AC 504 - Miscellaneous Field Code SPCL1, SPCL2, RPM1, RPM2, RPM3, and EAFAIL, for more information. Input the XREF EIN in the XREF-TIN section on the REQ77 to post with the TC 971 AC 504.

(7) Potential identity theft case needs to be referred to the proper BMF ID theft Liaison. The following will help in determining to which liaison the referral should be sent.
♦ CAWR assessment- CC TXMOD will show a TC 290 assessment in blocking series 55
♦ Exam assessment- CC TXMOD will show a TC 300 assessment or open Exam freeze (-L). Identify the PBC code and refer to the proper Field or Campus Exam liaison.
♦ 6020b assessment- CC TXMOD will show the literal “6020b” at the end of the TC 150 assessment and RCC “4”
♦ SFR assessment- CC TXMOD will show the literal “SFR at the end of the TC 150 assessment.
♦ Field Exam- CC AMDISA will show Primary Business Code (PBC) See Exam Employee Group Code (EGC) Contacts. Click on the Employee Group Code (EGC) listing Contacts to see who is working on the case based on the PBC code.
♦ Field collections- CC TXMOD will show service center status 26
♦ ACS- CC TXMOD will show service center status 22
♦ Accounts Management- Any case that does not meet other account criteria
♦ Criminal Investigation (CI) – If associated tax period or entity is controlled to CI with an un-reversed Transaction Code (TC) of 914, 916, or 918.

(8) Send Form 14566, BMF ID Theft Referral via secure e-mail to the proper BMF ID Theft Liaison. The listing is found on the Identity Theft-BMF page. In the explanation section on Form 14566, include any actions that you input on the SSN. Do not hold cases for completion; link CII cases to expedite processing. For more information, see the referral procedures in IRM 25.23.9.3, BMF ID Theft Liaisons. Document AMS/CII, if available, to reflect the referral sent, advise if the Form 14039 was submitted, the suspicious EIN and where the referral is being sent.

(9) If there is no indication of potential BMF identity theft and there is a TC 971 AC 504 on the account, reverse with a TC 972 AC 504 SPCL2. Refer to IRM Exhibit 25.23.2-5, IMF Only TC 972 AC 504 - Reversal of TC 971 AC 504. Route the case per normal procedures.

(1) Once ID theft or the possibility of identity theft has been confirmed, the case must be moved into the proper ID theft treatment stream and a control base must be opened if the employee has access to IDRS. The control base will remain open until ALL case issues have been resolved. If the case is originally in your function’s inventory but is being referred to another to be worked, the control will remain open until the case is accepted by the receiving function’s liaison. Refer the case following functional guidelines for referral procedures.

(2) If the contact is by phone and the case is being referred into another function’s ID theft treatment stream, the function receiving the case will open the control when the case is accepted into their inventory. Annotate on the referral “phone contact”. If your function is keeping the case, open the control based on functional guidelines.

(3) The responsible function (Collections, Examination, CAWR, FUTA, AM, etc.) will keep control from receipt to closure. All required account actions will be coordinated through the function with the open control.

(4) If more information is needed, the controlling function will send the Form 14039-B to the taxpayer and suspend the case. See IRM 25.23.9.7, Form 14039-B Business Identity Theft Affidavit.

(5) Accounts affected by BMF identity theft are often complex and cross functional lines. When this occurs, the controlling function will refer that part of the case needing action by another function. The Form 14566, BMF Identity Theft Referral was developed for this purpose. Refer to IRM 25.23.9.8, BMF Identity Theft Referrals for more information. The responsible function will put their IDRS control into "B" status to designate the case as suspended pending the referral completion.

(6) The controlling function is responsible for:

• Issuing the required correspondence.
  1- Acknowledgment letter- When the Form 14039-B is received from the taxpayer, it must be acknowledged by sending a Letter 5316C, BMF Identity Theft Documentation Acknowledgment and Interim Letter (Form 14039-B and supporting documentation) within 30 days of receipt.

  Exception: The acknowledgement letter is not necessary if it is clear the case can be resolved within 30 days of receipt into BMF IDT inventory. Letter 5317C, BMF Identity Theft Request for Information or Closing Letter will serve as an acknowledgement. If work schedules do not allow for time to make this determination, or it is not clear then the 5316C should be sent to acknowledge receipt.

  Exception: If a Form 14039-B is received and there is no active ID theft case open, the case will be controlled by the receiving function and a Letter 5316C sent to acknowledge receipt of the form and the ID theft indicator input. Once completed, the account should be researched to determine if the case should remain in the receiving inventory or referred to another functional liaison. If the case is being referred, the control will remain open until referral is accepted by that function.

  
  2- Interim if required. Send Letter5317C, BMF Identity Theft Request for Information or Closing Letter.
  3- Closing letter- Send Letter5317C BMF Identity Theft Request for Information or Closing Letter when ID theft issue has been resolved.

• Suspend collection activity, as appropriate.

• Input of the BMF ID theft indicator, TC 971 AC 522 IDTCLM. If a Form 14039-B is received, input the follow up indicator TC 971 AC 522 IDTDOC. See IRM 25.23.9.6,BMF Identity Theft Tracking Indicators

• Complete research if needed or send Form 14039-B to the taxpayer for completion.

Note: This list is not all inclusive.

(7) The function working the ID theft case, will ensure all issues are resolved and adjustments are posted prior to case closure. Input the closing TC 971 AC 522. Refer to IRM 25.23.9.6, BMF Identity Theft Tracking Indicators, for more information.

(1) In situations where the taxpayer makes an allegation of identity theft or when the IRS initially suspects that identity theft may have occurred, and preliminary research has been completed, the IRS controlling function will apply an identity theft indicator. The identity theft tracking indicator alerts others that a claim of identity theft has been reported and provides the IRS with a method to quantify the scope of BMF Identity Theft. Refer to IRM 25.23.9.6, BMF Identity Theft Tracking Indicators, for more information.

(2) In most instances, for taxpayer-initiated claims of identity theft, the case MUST be moved into identity theft inventory once the taxpayer has provided Form 14039-B to support a claim of identity theft. This provides victims with a treatment stream for case resolution specific to identity theft. For more information about identity theft documentation, refer to IRM 25.23.9.7, Form 14039-B, BMF Identity Theft Affidavit and IRM 25.23.9.6.2 , Taxpayer Supporting Documentation - TC 971 AC 522 IDTDOC.

(3) If after the account has been marked with a BMF Identity Theft Indicator, the employee determines identity theft did not occur, the BMF ID theft tracking indicator will be reversed by the employee assigned. This removes the case from identity theft inventory. See Exhibit 25.23.9-5, Reversing BMF Identity Theft Indicators, for more information. All other non-identity theft issues will be resolved using normal procedures.

(1) Prior to marking a taxpayer's account with a BMF identity theft indicator, all required preliminary research must be completed to rule out a possible mixed entity and the case MUST be assigned and controlled. Refer to IRM 25.23.9.4, BMF Identity Theft Research (Inquiry received via paper or phones) for more information. Only input the indicator if there are tax implications.

(2) Place an identity theft indicator on all MFTs and tax periods affected to ensure the account is moved into ID theft treatment stream. The identity theft indicator is input on taxpayer asserted BMF identity theft accounts and the IRS identified BMF identity theft cases.

(3) If the contact is by phone and the case is going to be kept in your inventory, open the control and input the TC 971 AC 522 based on functional IRM guidance.

(4) To mark the taxpayer's account involving BMF identity theft, use Command Code (CC) REQ77 initiated from TXMOD to input a TC 971 AC 522 IDTCLM with the Tax Administration Code designated for your function. Refer to Exhibit 25.23.9-1, TC 971 AC 5XX - MISC Codes. The BMF indicators work differently from IMF indicators. Ensure the secondary date and “MISC” sections are correctly input.

• The Secondary Date field will reflect the IRS received date of the taxpayer's inquiry or the date of the call. If the identity theft issue was internally identified, use the date you recognized the taxpayer was a victim of identity theft. Exception: RICS systemic selections for potential BMF IDT review do not contain a secondary date.

• The MISC> field will reflect your BOD and Program name as shown in Exhibit 25.23.9-1, TC 971 AC 5XX - MISC Codes and Exhibit 25.23.9-2, BMF ID Theft Indicators - TC 971 AC 522 IDTCLM - Initial Allegation or Suspicion of BMF ID Theft.

(5) Taxpayer identified BMF identity theft claims will be researched by the receiving function. If after all the required research is completed, it is determined there is a potential ID theft and the case is outside the scope of your function, refer the case to the proper liaison but do not input the TC 971 AC 522. The receiving function will control the case and input the TC 971 AC 522. If the receiving function is keeping the case, open the control and input the TC 971 AC 522 based on functional guidelines. Internally identified BMF identity theft accounts will be controlled and the TC 971 AC 522 input by the initiating function using date when preliminary research was completed. Refer to your functional IRM for information about account controls.

(6) Once it is determined the case will remain in your inventory:

(7) If the employee later determines identity theft did not occur, the BMF ID theft tracking indicator will be reversed by the employee assigned. This removes the case from identity theft inventory. All other non-identity theft issues will be resolved using normal procedures. See Exhibit 25.23.9-5 Reversing BMF Identity Theft Indicators, for more information.

(1) This code will only be applied to accounts when the IRS receives a completed Form 14039, Identity Theft Affidavit or Form 14039-B, Business Identity Theft Affidavit, from the taxpayer. Refer to IRM 25.23.9.7, Form 14039-B, Business Identity Theft Affidavit, for specific information about this form.

(2) After verifying the Form 14039 or Form 14039-B and associated taxpayer documents are complete and legible, you will need to mark the taxpayer's account to reflect IRS receipt.

(3) From TXMOD, you will use Command Code (CC) REQ77 to input a TC 971 AC 522.
The Secondary Date: field will reflect the IRS received date of the taxpayer's documents
The MISC>: field will be input to reflect your BOD and Program.
Refer to Exhibit 25.23.9-1 TC 971 AC 5XX - MISC Codes and Exhibit 25.23.9-3 BMF ID Theft Indicators - TC 971 AC 522 IDTDOC - BMF ID Theft Documentation for more information.

(1) Case Closure Analysis: The input of the TC 971 AC 522 CLSIDT signifies there was ID theft and all account actions have been completed and the case closed. If it was determined that no ID theft has occurred, you must reverse the TC 971 AC 522. See IRM 25.23.9.6.5, Reversing BMF Identity Theft Indicators, for more information. Perform case closure analysis to ensure all identity theft related issues have been addressed and resolved. This includes but is not limited to:

• Review both prior (a minimum of three prior years) and subsequent years for apparent evidence of unresolved identity theft issues

• Release notice or enforcement holds as appropriate

• Ensure the victim received their proper refund if one is due

• Verify and update the taxpayer's address

• Close down fabricated EIN

• If the EIN is not active, delete filing requirements

• Move payments not belonging to the taxpayer based on functional guidelines. If out of scope, refer to the proper area to have the payment moved. Do not close the case until all actions have been taken by assisting function.

• Take all required account actions

• Send closing letter to taxpayer

(2) Other outstanding account issues identified during case closure analysis should ONLY be referred to another function when the case cannot be resolved within your function.

(3) The employee assigned the case will close the identity theft issue by marking the account with a TC 971 AC 522 with the Tax Administration Source Code for their BOD and Program. Refer to IRM 25.23.9.6, BMF Identity Theft Tracking Indicators.

(1) We currently have the capability to lock accounts. An account can be locked in the following situations:

• A Fabricated EIN

• A Business no longer has any federal filing requirements

• A business is closed

• A business is no longer operational (defunct)

• A business has been inactive for 3 or more years

• A business filed final returns

(2) If ID theft has been determined and the taxpayer says they have no association with the business, the account can be locked to prevent the filing of any returns or allow for the usage of the EIN on any IMF filings. IRM 25.23.9.8.1, Fabricated or Inactive EIN Procedures, for working these cases.

(3) In situations where the taxpayer has stated the business is closed and the EIN has been used to either file fraudulent BMF filings or income documents, the account can be locked . In these situations, you will need to send a referral to IP to have the account locked. Follow the procedures in IRM 25.23.9.8.4, Referrals to Lock the Account.

(4) Accounts will only be locked in situations where there is confirmed ID theft, business is closed, inactive, or the EIN has been considered fabricated.

(5) If the account has been locked in error, send a referral following the procedures in IRM 25.23.9.8.4, Referrals to Lock the Account, and request the lock be reversed.

(1) BMF identity theft reversal codes provide better tracking of alleged BMF ID theft cases. If it has been determined that there is no ID theft on the account and there is a TC 971 AC 522 on the module, you must reverse the indicator. The table below provides a listing of the codes used when reversing a BMF identity theft allegation. It is imperative that the BMF identity theft indicators are reversed when BMF identity theft did NOT occur or was not substantiated by the taxpayer. This is to remove the case from the identity theft population. If reversing the indicator, you must annotate AMS/CII with the information that supports the reversal.

(1) An account will be marked with a TC 972 AC 522 NORPLY when a request was made to a taxpayer to submit more information to support the identity theft claim and no taxpayer response was received. This request for more information is issued when the determination cannot be made based on internal research.

(2) Use Command Code (CC) REQ77 initiated from TXMODA to input a TC 972 AC 522 reflecting a Tax Administration Source Code NORPLY in the "MISC" field. Refer to Exhibit 25.23.9-5, for more information.

(3) If the taxpayer contacts the IRS after the TC 971 AC 522 is reversed due to a no reply, a new TC 971 AC 522 IDTCLM needs to be input using the secondary date of the original TC 971 AC 522.

(1) In situations where it is determined no identity theft occurred, a reversal of the BMF identity theft indicators present on the tax module(s) must be completed. Document on AMS/CII the reasoning behind the determination that no ID theft exists.

(2) Use Command Code (CC) REQ77 initiated from TXMODA to input a TC 972 AC 522 reflecting a Tax Administration Source Code NOIDT in the "MISC" field. Refer to Exhibit 25.23.9-5, for more information.

(1) When a taxpayer submits Form 14039-B, the Form 14039-B and associated document(s) must be reviewed to determine if they are legible and complete.

(2) A document is considered legible when the copies provided are clear and easily read. Once you have determined the documentation provided is complete and legible, initiate taxpayer contact to notify the taxpayer the information requested has been received.

(3) When the documentation is NOT legible/complete:

(4) Once documents have been verified as complete and legible, you will mark the account with a TC 971 AC 522 IDTDOC and the Tax Administration Code designated for your BOD/Program. Refer to IRM 25.23.9.6.2,Taxpayer Supporting Documentation - TC 971 AC 522 IDTDOC, for more information.

(1) A fabricated EIN is an EIN that was established for the sole purpose of defrauding the government through the filing of IMF and BMF false refund returns or income documents. An Inactive EIN belongs to a legitimate business whose business operations have ceased.

(2) You will need to perform all research detailed in IRM 25.23.9.4, BMF Identity Theft Research, and Exhibit 25.23.9-7 BMF Identity Theft Research Requirement, to help you in determining the validity of the EIN.

(3) Research IRPTRI to determine if the BMF entity filed Forms W-2. It will be necessary to research the IMF accounts if Forms W-2 were filed to determine if:

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(4) All account actions must be taken prior to requesting the account be locked. See IRM 25.23.9.9.3, Posted Return on Either a Fabricated EIN or Inactive Account, for the required account action needed.

(5) Take the following actions once the EIN is determined to be a fabricated or inactive business.

1. Update the BMF sort line to include “Identity Theft”. This is to advise Submission Processing that this EIN has been considered “fabricated” and it should not be re-opened if a return is received. Inactive accounts may need to be unlocked later.

2. Use Form 14566, BMF Identity Theft Referral to complete one referral to IP, RICS and CI. The referral to IP is to have the account locked with a TC 971 AC 524 and applicable MISC field reference. The referral to RICS is to add the EIN to their database of bogus and fabricated EINs as they relate to IMF/BMF filings. The referral to CI is to notify them that you have made a BMF identity theft determination.

(6) Referral should include all research performed and document the reason it was determined the EIN is for a fabricated or inactive business.

(7) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(8) Once the TC 971 AC 524 is input, the referral will be returned to the originator stating the input has been completed.

(1) The RICS organization keeps a database of bogus and fabricated EINs as they relate to IMF/BMF filings. After exhausting all BMF and IMF research and a determination cannot be made as to the authentication of the EIN, it may be necessary to request assistance from RICS to have them check the EIN and related SSNs against their database. The Form 14566, BMF Identity Theft Referral will be used for this purpose.

(2) Referrals to RICS for this purpose will be limited to situations where more information is needed to confirm the existence of BMF ID Theft.

(3) After documenting all your findings and research on the Form 14566, BMF Identity Theft Referral, forward the referral to your BMF ID Theft Liaison. The liaison will review the form and if the form is complete, the liaison will send it to RICS using secure E-mail to: *TS EF Referrals. In the “Actions requested (required)” section of the form, check the “other” box and request RICS provide information confirming if this EIN was used to file fraudulent returns or if they have already flagged this EIN as fabricated or bogus.

(4) The Entity Fabrication (EF) Team will review your referral and respond within 30 days by returning the Form 14566, BMF Identity Theft Referral, via secure E-mail. The EF team will respond that the account has been added to their scheme list or rejected as not involving BMF ID theft.

(5) If there are questionable IMF returns filed with what has been determined to be a fabricated EIN, complete the referral form with all information pertaining to the EIN to RICS. They will initiate research into the IMF accounts. Document the sending of the referral on AMS/CII if a referral was sent, along with the details of the request. The control base will remain open while awaiting RICS response.

(6) RICS may lock an EIN suspected of being fabricated and issue the taxpayer Letter 5263C, Entity Fabrication, requesting more information to verify the entity. Identify these accounts by the following:

• An open control assigned on ENMOD to 1481400000 with a category code of TPPI and activity history showing POTENTEF

• A posted TC 971 AC 524 on ENMOD containing BMF RICS EINFB2 in the MISC field.

(7) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(8) If the taxpayer calls after issuance of Letter 5263C, Entity Fabrication, and the account contains the indicators listed above, follow the If/Then chart below.

(1) CI keeps a database of IMF/BMF accounts under investigation. You may request CI check the EIN and related SSNs against their database after you've exhausted all BMF and IMF research options and still cannot authenticate the EIN. Use the Form 14566, BMF Identity Theft Referral, for this purpose.

(2) After documenting all your findings and research on the Form 14566, BMF Identity Theft Referral, forward the referral to your BMF ID Theft Liaison. The liaison will review the form and if the form is complete, the liaison will send it to the CI liaison. Document the sending of the referral on AMS or CII if a referral was sent, along with the details of the request.

(3) CI will review your referral to determine if there is an open investigation related to the EIN and respond within 30 days by returning the referral form via secure E-mail with the appropriate response.

(4) The control on the case will remain open while awaiting CI’s response.

(1) Beginning January of 2017, after determining an EIN is fabricated or inactive, refer the case to your BMF ID theft Liaison using the Form 14566, BMF Identity Theft Referral, to request a TC 971 AC 524 be applied to the EIN. Be sure to document all your findings and research on the Form 14566.

(2) The input of the TC 971 AC 524 will cause the posting of a TC 020 locking the account. The TC 020 will post one cycle after the TC 971 AC 524. The TC 020 is only visible using CC BMFOLE. A TC 020 with a prior TC 971 AC 524 will not delete the entity but will prevent the posting of returns and payments to a tax module that is not already established on BMF.

(3) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(4) Prior to sending the referral to have a fabricated or inactive EIN locked, ensure:

1. There are no balances remaining on the account.

2. There are no credits on the module.

3. The sort name line is changed to “Identity Theft”. If there is currently a name on the sort name line, move it down to the in care of name line. Then input “Identity Theft” on the sort name line.

4. Document the sending of the referral on AMS along with details of the request. If working a CII case, attach the referral and a PDF print of the original entity (CC ENMOD) to the case. The referral and the PDF print of the original entity should be included in the request to have the account locked.

   Note: For account lock reversal requests research CII for the original case and, if available, attach the PDF print of the original entity (CC ENMOD) to the secure e-mail. If the original case does not have a PDF print of the original entity attached, notate in the referral that the information was not available.

(5) Once the TC 971 AC 524 is input, IP will return the referral to the originator stating the input was completed.

(6) Do not close the case until the TC 971 AC 524 and TC 020 are posted on the account and all other account actions have been taken.

(1) In situations where identity thieves filed false income documents, contact the CAWR function to alert them to the false income documents.

(2) Document all your findings and research on the Form 14566, BMF Identity Theft Referral and forward it to your BMF ID Theft Liaison. Include all pertinent documentation and document the referral on AMS or CII if the referral was sent. Your BMF Liaison will forward the referral to the CAWR Liaison using secure E-mail.

(3) CAWR will acknowledge receipt of your referral within 30 days by returning the Form 14566, BMF Identity Theft Referral , via secure E-mail.

(1) As ID theft incidents increase, ID thieves are constantly changing ways of obtaining fraudulent refunds from the IRS. Those employees that work paper cases and answer phones are often the first to recognize a scheme or an invalid return. When working any inventory, ID theft should always be in the back of your mind. When working duplicate or amended returns, it is necessary to ensure that all the returns have been filed by the true EIN owner or authorized third party.

(2) ID theft returns need to be handled differently. Returns that have been considered ID theft will be nullified and the ‘valid’ return input on separate adjustments.

(3) Prior to making any adjustments on the account, thorough research must be completed. The determination that all returns have been filed by the EIN owner or authorized third party needs to be made. There are some quick checks that should be completed to help in determining if the return in question is potentially an ID theft return and more research will be needed. When working duplicate or amended returns ask yourself (this list is not all inclusive):

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(4) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) If you have access, use the BMF ID Theft Research Tool (BITR), to help in the research of the returns filed. Compare the information on the returns with previously filed returns. Review the return for anything that may be out of the norm for the taxpayer. Remember one aspect does not necessarily show ID theft but if there are multiple issues it is better to question the return than to issue a fraudulent refund. Look at the returns asking the following (this list is not all inclusive):

1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

7. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(6) If the duplicate/amended return displays any of the characteristics listed above, work the case as a potential ID theft case.

(1) Once it is determined that the original posted return is an ID theft return, that return is considered a nullity. This means the information on the account relating to the posted original return is not valid. This includes the Assessment Statute Expiration Date (ASED) posted on the account.

(2) Determine if the ASED needs to be addressed prior to inputting any adjustment. On duplicate returns it may be necessary to update the ASED to reflect the correct received date of the valid return. The ASED will need to be updated if it is different than the date posted on the original return on the module. The ASED will be updated to the receive date plus 3 years.

(3) Input the new ASED with a TC 560 using CC REQ77 as appropriate. See IRM 25.6.1.6.14, Criteria for Establishing a Statute of Limitations Period, for more information.

(4) If the original return is the ID theft return, research the account to determine if the address has been changed by the posting of the return. If the address has been updated, change the address back to the correct business address.

(5) Research the account to determine if any overpayment has offset to any other module (IMF and BMF). Reverse all offsets using the proper transaction codes.

(6) Determine if the refund has been lost. If there is a TC 846/840 on the module and the refund cannot be stopped, the account must be balanced and the lost refund credited back to the account. This is done by moving credit from the 1545 account back into the module. Refer to IRM 25.23.9.9.6, Lost Refund. Input a secondary TC 570 to hold the credit when the TC 841 posts. Do not adjust the account until the TC 841 has posted.

(7) For Form 1120, if the refund was not issued and there was a request for direct deposit, input a TC 971 AC 850 to stop any overpayment from direct depositing to the ID thief’s account.

(8) Back out the ID theft return. Back out all transactions and item/credit references associated with the return. Input the adjustment with a HC 4. When backing out the return ensure that all associated penalties, interest and fees that were manually assessed have been included in the adjustment.

(9) Input the second adjustment to reflect the taxpayer’s valid return. Post delay this adjustment 1 cycle to ensure all prior account actions have posted.

(10) If there is a TC 130 on the XREF SSN which relates only to the ID theft issue, reverse the TC 130 using CC REQ77. Research the account thoroughly to ensure that all liabilities on the account are related to the ID theft issues only.

(1) If there is a return posted to the account and it has been determined the EIN is fabricated or inactive, the account needs locked down. This means that all posted transactions on the module will need to be reversed.

(2) Back out all posted returns from the involved modules. Use HC 4 on the adjustment to prevent any credits for refunding. For inactive accounts, only back out the returns/transactions created from the identity theft.

(3) If there are any manually assessed penalties, interest or fees associated with the assessments on the module, reverse them. Once all adjustments post the balance on the account should be “zero”.

(4) If there are payments on the account, research the payments to ensure they are not misapplied. If they are, move them to the correct account. If you are unable to determine where the payments should be applied, move the payment to excess following normal procedures.

(5) If there are offsets or payments belonging to the ID Theft victim, determine if the payments are eligible for refund. If the statute has expired on the payments move them into excess following normal procedures.

(6) If there has been collection action taken, such as a lien filing or levy situations, they must be released.

(7) If there is a TC 130 on the XREF SSN which relates only to the ID theft issue, reverse the TC 130.

(8) Under the X-REF SSN, input TC 971 AC 504 MISC SPCL2 with EIN as XREF TIN.

(9) If it is determined to be a fabricated or inactive EIN, see IRM 25.23.9.8.1, Fabricated or Inactive EIN Procedures, for more action requirements.

(1) If the “invalid” return posted first and the valid taxpayer filed a balance due return with the balance still unpaid or was paid after the original return due date, it is necessary to properly handle the account so the FTP penalty can be systemically computed on the valid taxpayer’s return.

(2) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(4) It is imperative the account be properly handled to ensure the correct amount of FTP penalty is charged.

1. It is necessary to completely back out the invalid return, DO NOT net with the valid return. Back out any associated penalties other than a bad check penalty and the FTP penalty. The FTP penalty will automatically reverse when the account is backed out.

   Note: Address the bad check penalty as a separate issue. Determine if the payment was made by the alleged ID thief or by the business. If payment was not made by the business follow IRM 20.1.2.2.6.3, Wrong Return Posted First, for procedures to abate the penalty.

2. Take all other account actions needed to balance the account. This would include any offset reversals, moving of refunds or crediting lost refunds back into the account. Include all proper hold codes where applicable.

3. Compute the “tax shown” on the “valid” return. This is the amount of tax the taxpayer figured they owe, minus any taxpayer computed refundable and prepaid credits. Follow the instructions in IRM 20.1.2.2.6.3, Wrong Return Posted First, for computing “tax shown.” This amount will be entered in the adjustment using Item Reference Number (IRN) 871. The input of the IRN 871 tells the computer the tax the taxpayer expected to owe on their return and the amount of tax that will be assessed FTP penalty from the due date of the return. The computer will recognize ES payments, FTD penalty and refund reversals (TC 841) in the calculation of the FTP penalty.

4. Determine if the ASED needs to be addressed prior to inputting any adjustment. If there is a duplicate return posted it may be necessary to update the ASED to reflect the correct received date of the valid return. The ASED will need to be updated if it is different than the date posted on the original return on the module. The ASED will be updated to the received date plus 3 years.

   Example: The return due date is 4-15-2016 and the ID theft return posted 4-14-2016. The ASED for this return would be 4-15-2019. The valid taxpayer had filed an extension on 4-10-2016. The valid return was received on 8-14-2016, the ASED for the valid return would need to be updated to 8-14-2019.

5. Input the new ASED with a TC 560 using TC REQ77 as appropriate. See IRM25.6.1.6.14 Criteria for Establishing a Statute of Limitations.

6. Math verify the return and complete the normal computations for determining tax, credits and other penalty amounts to be entered on the adjustment.

7. Input the adjustment using all applicable item reference and credit reference numbers with a Priority Code 2, Hold code 0 (zero) and the proper IRN 871 amount. The PC 2 allows the computer to recognize the need to compute the FTP penalty back to the RDD for the lesser of the IRN 871 amount or the “tax assessed” on the return. For example, if there is a discrepancy between what the taxpayer thinks they owe and what is calculated, such as a math error, the FTP penalty will be correctly computed. The HC 0 allows the notice to generate with the correct FTP penalty calculation. The computer will recognize any payments, credit elect, withholding and refundable payment credits applied against the tax owed and adjust the FTP penalty computation accordingly.

   Caution: Any tax or refundable tax credits posted prior to the priority code “2” adjustment are ignored in the FTP penalty computation. This is the reason the original return needs to be completely backed out.

8. Input the proper post delay(s) on the adjustment to allow all account transactions to post prior to the adjustment.

9. SeeIRM 20.1.2.2.6.3, Wrong Return Posted First, for more information.

(1) If the assessment of the taxpayer’s true return will include a tax increase and after determining the ASED for the taxpayer’s valid return is within 90 days, then statute procedures must be followed. Follow procedures in the IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitation Issues.

(2) In situations where the taxpayer is claiming ID theft on an older year and there is a balance due, there may be payments on these accounts from offsets, levy payments, or payments made by the taxpayer to avoid collection activities. Depending on the circumstances of the case and if the payments are creating an overpayment, it is necessary to determine if the payments are refundable. Determine if the payments or offsets meet the RSED rules prior to allowing any refund from generating. See IRM 25.6.1.7.2, Time when Payments and Credits are Considered to be Made.

(1) If an ID theft return (original or amended) has been processed and a refund was issued to the Identity thief, credit back the ID theft refund amount into the taxpayers account to balance the account. This is done by moving the credit from the ID Theft 1545 account.

(2) Prep and post the TC 841/700 prior to backing out the invalid return.

(3) Move all offsets prior to moving the credit from the 1545 account.

(4) To move the credit from the 1545 account, input command code IDT48 (to reverse a fraudulent refund to the taxpayer affected by IDT) or IDT58 (to reverse a partial refund to the taxpayer affected by IDT) as applicable. The 1545 account is the debit account and the taxpayer’s account is the credit account.

(5) If part of the refund was offset and the credit is being returned to the module, only the part of the refund that is unrecoverable will be moved from the 1545 account.

(6) To input the reversal using command codes IDT48 or IDT58:

1. See IRM 2.4.61-1, IDT48, RPM48 or CSO48 Input Format

2. SeeIRM 2.4.61-2,IDT58, RPM58 or CSO58 Input Format

(7) Suspend case and monitor for the posting of the TC 841/700.

(1) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) For the IRS to consider the issuance of a new EIN based on identity theft, the ID theft must have federal tax administration impact. These would include:

1. Fraudulent returns filed under this EIN. This would include original or amended returns

2. Filing of fraudulent income documents. This would include Forms W-2, Form 1099 series, etc.

(3) If research shows there has been tax impact on the account and the taxpayer insists on a new EIN, advise them to:

1. Complete a new Form SS-4, Application for Employer Identification Number.

2. Complete Form 14039-B, Business Identity Theft Affidavit.

3. Attach the Form 14039-B to the Form SS-4 and mail to:
   Ogden BMF Entity
   1973 N Rulon White Blvd.
   Mail Stop 6273
   Ogden, UT 84404

(4) When the forms are received in Entity, a new EIN will be assigned and then merged with the old number. The taxpayer will receive notification when the new EIN is assigned.

(5) Take all the required account actions that need to be completed to make the account whole.

(6) In situations where the taxpayer says their EIN was stolen and used in ways other than the federal filing of returns or income documents, the IRS will not issue a new EIN to the existing business on that basis.

(7) If the taxpayer insists on a new EIN even though there is no tax impact, they may shut down the current business to obtain a new EIN. They may:

1. File final returns for all open filing requirements. This will close out the current business.

2. Contact the state for approval of the new business name.

3. Submit a new Form SS-4, Application for Employer Identification Number, with a new business name or apply on-line. If submitting the Form SS-4, Application for Employer Identification Number, advise the taxpayer to check the “Other” box under line 10 and specify the reason for the new EIN. They will also need to supply the old EIN on line 18. This will help to prevent the research from showing a duplicate EIN if the new name is like the old.

4. Advise the taxpayer to send the completed Form SS-4 to:
   Internal Revenue Service
   Attn: EIN Operation
   Cincinnati, OH 45999
   Fax: (855) 641-6935

5. They will receive notification CP 575 when the new EIN is assigned.

(1) If a taxpayer suspects BMF ID theft, they may contact us by phone or in writing. In either case all responses to these requests will be mailed ONLY to the address of the business. If the return in question changed the taxpayer’s “good” address, complete research to determine the current address of the business. Utilize outside resources if necessary, such as Google or Google Maps to verify the address.

(2) Phone Contact- If the taxpayer contacts us by phone and after complete research there is potential ID theft, the taxpayer may want copies of the return or forms in question to verify the non-filing of the information. Document on AMS with the caller’s name, and what documents were sent.

(3) Paper case- If the request is received by paper, ensure the taxpayer has provided all the needed information to complete the request. This would include the EIN, forms in question and Tax periods.

(4) In either request type, it is not necessary to redact and send all requested items if the number of documents is too large. For example, the number of Forms W-2 filed may exceed 1,000 forms. Redact and send only enough of the information for the taxpayer to make the determination that they did not file the information. In this situation, advise the taxpayer they will be receiving only a part of the information because the volume is too large to redact.

(1) If the taxpayer is requesting copies of potential ID theft returns or income documents, obtain the documents using the information available on TDS, IDRS or MeF for electronically filed returns. For employees utilizing the BITR tool, information from the screens can be printed by going to either the print icon or “file” for the print option. Once the information is accessed:

1. Print the information as a PDF file; use the CII number as the case name and save to your SBU folder. (Hint: Check your SBU folder prior to closing the file to ensure the file is saved).

2. Once the PDF file opens, click on the “Tools” menu.

3. Under “Protect & Standardize” click on “Redact”.

4. Using the mouse pointer, click and then drag over the information to be masked.

5. Continue to mask all required information.

6. Select “Apply” under the protection menu when all masking is complete. Another dialogue box will appear, click “Continue”. The boxed areas will then turn black for the redaction.

7. Save file in SBU folder - include CII case ID in the file name. The page can now be printed normally and sent to the taxpayer.

(2) What needs to be redacted- While the information that pertains to the determination of the victim-taxpayer’s tax liability can be disclosed, information not relating to the computation of liability cannot be disclosed. It is necessary to determine which information must be redacted prior to sending the taxpayer the requested documents. Information that needs to be redacted is (these lists are not all inclusive):

1. Tax Forms
   • TINs- Mask entire number except the last four digits. This includes all identifying identification numbers listed on the return or attached schedules if different from the EIN owner’s.
   • Business or Corporation names- Mask entire business name except the first four letters of the first name and the first four letters of any subsequent name on the name line. This includes all names listed on the return or attached schedules if different from the EIN owner’s.
   • Addresses- Mask the entire address except the first six numbers or letters of the street address line including spaces. This includes all addresses listed on the return or attached schedules if different from the EIN owner’s.
   • Preparer Identification Number- Mask entire number except the last four digits of DPIN or PTIN.
   • Telephone number if not the number recorded on the account- Mask entire number except for last four digits.
   • Banking information- this includes the routing and account numbers if present- Mask entire number except for last four digits.
   • IP address if present- Mask entire IP Address except the last four digits of IP address.
   • Software information if present- Mask entire Software ID except the last four digits of Software ID.
   • All signatures on the tax return, forms, or schedules- Mask entire signature.

2. Income Document
   • Employer/Payer address if different from the EIN owner’s- Mask the entire address except the first six numbers or letters of the street address line including spaces.
   • Employer/Payer name if different from the EIN owner’s- Mask entire name except the first four letters of the recipients last name or business name.
   • Taxpayer/Recipient/Filer name- Mask entire name except the first four letters of the recipient’s last name or business name.
   • Taxpayer/Recipient/Filer address if different from the EIN owner’s- Mask the entire address except the first six numbers or letters of the street address line including spaces.
   • Taxpayer/Recipient/Filer TIN (Identification number)- Mask entire number except the last four digits.
   • Employer/Filer State ID number if different from the business’s federal number
   • Account number
   • PSE’s name and telephone number- Forms 1099-K, Payment Card and Third-Party Network Transactions

(3) If the case is being worked through CII, attach a copy of the redacted print to the CII case.