Background
Under 26 U.S.C. § 7431(e), the IRS must notify taxpayers “as soon as practicable” if their confidential tax return information is breached, following the filing of criminal charges related to the breach.
Earlier this year, the IRS began notifying thousands of taxpayers that their tax returns or associated data had been compromised in a massive data breach orchestrated by a contractor working for the IRS. From 2018 through 2020, Charles E. Littlejohn targeted the tax returns of high-net worth taxpayers and their associated entities and sent their data to ProPublica, an online non-profit newsroom who later published much of the sensitive data as parts of stories on high-profile taxpayers.
Littlejohn recently pleaded guilty to unauthorized disclosure of tax return data and was sentenced to five years in federal prison.
What does this mean?
Recipients of IRS Letter 6613-A should know that some or all of their federal tax return data from 2018 through 2020 was compromised by Littlejohn’s criminal scheme.
This letter does not mean that action is required or that your account with the IRS is in poor standing.
Considerations for Entities
Partnerships or other entities with multiple owners who received a Letter 6613-A should consider consulting with an attorney to discuss disclosure to its constituent owners who may not have individually received a notification of this breach.
Recommended Action
To protect yourself from this unprecedented breach of the public trust, we recommend the following actions:
1. Consider applying for an Identity Protection Pin. A common crime following data theft involves using a taxpayer’s social security number to file fraudulent tax returns requesting large refunds. An Identity Protection PIN (“IP PIN”) can help protect you from this scheme. After you obtain an IP PIN, criminals cannot file an income tax return under your name without knowing your IP PIN, which changes annually.
2. Request and review your tax transcript. The IRS maintains a transcript of all your tax-related matters, including filings, payments, refunds, extensions, and official notices. Regularly reviewing your tax transcript (e.g. every six to twelve months) can reveal fraudulent activity while there is still time to take remedial action. If you have questions about your transcript or need help obtaining it, we would be happy to assist you.
3. Obtain identity protection monitoring services. Applying for an IP PIN and regularly reviewing your tax transcript will help protect you from tax fraud, but it will not protect you from other criminal activities, such as fraudulent loan applications. To protect yourself from these other risks, you should obtain identity protection monitoring services from a reputable provider.
If you have questions or concerns, please feel free to reach out to us.
