This IRM provides information and instruction to Appeals Technical Employees (ATE) working Identity (ID) theft claims.

Identity theft occurs when someone uses an individual’s personal information or business’s identifying information, such as name, Social Security Number (SSN), or other identifying information without permission, to commit or attempt fraud.

Taxpayers may notify the IRS when they believe they have experienced an identity theft incident. In these instances, taxpayers must provide documentation to establish that they are identity theft victims.

Appeals will generally see two types of identity theft

ID theft arises as an issue in Appeals when:

Refer to IRM 25.23, Identity Protection and Victim Assistance, for servicewide guidance on identity theft.

Refer to IRM 25.23.2, Identity Protection and Victim Assistance - General Case Processing, for information and guidance regarding required documentation and actions for processing identity theft claims.

Refer to IRM 25.23.10, Compliance Identity Theft Case Processing, for procedures specific to cases involving Compliance issues.

When taxpayers believe they are victims of identity theft, they are required to provide documentation to prove the identity theft.

Taxpayers are not required to provide substantiation if there is an unreversed TC 971 AC 501, AC 506, or AC 522, with a Tax Administration Source Code INCOME, MULTFL, INCMUL, NOFR or OTHER on the account in the prior 3 years. Before requesting substantiation documentation from an IMF taxpayer, check ENMOD/IMFOLE for:

Substantiation documentation is valid for three years from the date received and processed by the IRS. If the taxpayer experiences a new ID theft incident after the three-year time frame, the taxpayer will need to submit new documents.

When taxpayers make an identity theft complaint, the account will be marked with TC 971 AC 522 reflecting receipt of documentation using the appropriate Tax Administration Source Code (INCOME, MULTFL, INCMUL, OTHER, or NOFR). Refer to Exhibit 8.6.5-1.

Refer to IRM 25.23.2.18, Identity Theft Support Documentation - Overview for documentation requirements. If there's no record of a prior substantiated ID theft incident, request that the taxpayer provide the following substantiation documentation within 30 days for Individual Master File (IMF) Cases:

If a taxpayer is required to provide substantiation documentation but fails to do so within a 30-day deadline, proceed with case resolution assuming the taxpayer is not an ID theft victim.

For Business Master File Cases (BMF), requests for information are only be made when an identity theft determination cannot be made based solely on internal research by Compliance. Accordingly, when the taxpayer raises identity theft in a BMF case, follow the guidance for making a referral in accordance with the type of case in the proceeding sections.

Identity theft tracking indicators are used to mark both tax-related and non-tax related identity theft incidents and help identify open and closed cases. Some action codes are used to track the progression of inventory, while others provide taxpayer protections once the tax related identity theft issue is resolved.

ID theft tracking indicators are:

Refer to IRM 25.23.2.16, Tracking and Reporting Identity Theft Cases - Identity Theft Indicators, for tracking and reporting codes.

Refer to IRM 25.23.2.8, When to Update the Victim's Address, for considerations on updating the taxpayer’s address.

When identity theft claims are determined to be invalid, taxpayers are issued appeal rights through the normal compliance process as appropriate. Appeals will consider any underlying tax issues.

Refer to IRM 25.23.10.10, Invalid Identity Theft Determination.

ATEs are not the first finders of fact. Appeals will consider ID theft issues after they have been investigated by Compliance.

If a taxpayer raises identity theft as an issue in a non-docketed case in Appeals that has not previously been considered by the Service, follow the procedures in IRM 8.6.1.6.4, Taxpayer Raises New Issue. Place Feature Code "ID" on Appeals Centralized Database System (ACDS).

If a taxpayer provides new information with respect to an unproved Identity Theft complaint that was never previously provided to Compliance, then follow the procedures in IRM 8.6.1.6.5, Taxpayer Provides New Information. Place Feature Code "ID" on ACDS.

When a taxpayer raises potential ID theft in a field sourced case or a Business Master File (BMF) case that has not been previously considered or provides new information with regard to the ID theft claim in a docketed case, the ATE will follow the Docketed Exam Assistance procedures in IRM 8.4.4, Appeals Docketed Cases, Examination Assistance Requests. Place Feature Code "ID" on ACDS.

When a taxpayer raises potential ID theft in an Individual Master File (IMF) campus sourced case that has not been previously considered or provides new information with regard to the ID theft claim in a docketed case, the ATE will refer it to IDTVA-C for review and determination. Place Feature Code "ID" on ACDS.

The ATE will prepare Form 3177, "Notice of Action for Entry on Master File" , instructing APS to input TC 971 AC 522 with Tax Administration Source Code "PNDCLM" for each year ID theft is claimed.

The ATE will immediately notify the Counsel Attorney assigned to the case (or the Associate Area Counsel if an attorney has not been assigned) when it is learned that the petitioner is claiming to be an identity theft victim.

The ATE will prepare a package to refer to the IDTVA-C mailbox.

The package will include:

The ATE will forward the package by secure email for review to the Compliance IDT Liaison at “*SBSE CCS BSC EXAM IDT” with read receipt.

IDTVA-C will mark these requests as priority and will make every attempt to make a determination within 45 days. A follow up email should be sent if no response is received in 45 days.

If the complaint for identity theft is determined invalid by IDTVA-C, they will provide the decision to the ATE by secure email.

If the complaint for identity theft is determined to be valid by IDTVA-C, they will provide the ATE with a detailed description of the relief granted by secure email.

Depending on the category and type of adjustments needed, the ATE will prepare:

When tax computations are necessary, the ATE will have a Tax Computation Specialist (TCS) prepare the Form 5278 and Form 5403 Instructions.

See IRM 25.23.4, Account Paper Process, for necessary actions when performing account adjustments.

The ATE will resolve the remainder of the case as appropriate using existing procedures.

If you determine your taxpayer was a victim of ID theft and adjustments are necessary (interim adjustments or adjustments made at closing), send the necessary documents via encrypted email to "AP-COS-APS-East-HOL ACDS Update Request" or to:
Brookhaven APS
IRS Appeals
1040 Waverly Avenue, Stop 906
Holtsville, NY 11742-1129

When a taxpayer raises potential ID theft that has not been previously considered or provides new information with regards to the ID theft claim in a CDP case, the ATE will refer it to IDTVA-C for review and determination. Place Feature Code "ID" on ACDS.

The ATE will prepare Form 3177, Notice of Action for Entry on Master File, instructing APS to input TC 971 AC 522 with Tax Administration Code PNDCLM for each year ID theft is claimed.

The ATE will prepare a package to refer to the IDTVA-C mailbox.

The package will include:

The ATE will forward the package by secure email for review to the Compliance IDT Liaison at “*SBSE CCS BSC EXAM IDT” with read receipt.

IDTVA-C will mark these requests as priority and will make every attempt to make a determination within 45 days. A follow up email should be sent if no response is received in 45 days.

If the complaint for identity theft is determined invalid by IDTVA-C, they will prepare a reply to notify the taxpayer of the decision and send a copy to the ATE by secure email.

If the complaint for identity theft is determined to be valid by IDTVA-C, they will make the necessary account adjustments and provide the ATE with a detailed description of the relief granted by secure email.

The ATE will resolve the remainder of the case as appropriate using existing procedures.

Follow the procedures in IRM 8.6.5.6 and identify the type of case on Form 10467, Appeals Division Feedback Report and Transmittal Memorandum, and place Feature Code "ID" on ACDS.

When it is determined that the taxpayer was a victim of identity theft, the Service may:

Refer to IRM 25.23.2.6.2, Nullifying Returns.

Refer to IRM 25.23.4, Accounts Paper Process, for account actions to be taken for valid ID theft claims.

Before closing a valid ID theft case, the ATE must (if applicable):

There may be instances where Appeals confirms that the taxpayer is a victim of identity theft and will need to instruct APS to make account adjustments.

Refer to IRM 25.23.4, Account Paper Process, for necessary actions when performing account adjustments.

The ATE must ensure the taxpayer's address in IDRS is correct. Failure to verify and update IDRS to the taxpayer's correct address may result in the ID thief getting the taxpayer's mail from the IRS, including the Identity Protection Personal Identification Number needed to file in future years.

The use of tax computations by Appeals is dependent on the complexity of the adjustment. Tax computations are generally not necessary when Form 3870, Request for Adjustment, is sufficient to adjust a taxpayer's account.

ALL adjustments attributable to ID theft must be routed to and performed by Appeals' ID Theft Specialized Unit in Brookhaven APS. The mailing and email addresses of the specialized unit are found on the Appeals ID theft website

The ATE will work with APS to rectify problems with account adjustments when needed.

BOD/Function

Program Name

Tax Administration Source