Why Does My Tax Preparer Need My Driver’S License? (Correct answer)

The IRS and State tax offices requests that you provide your driver’s license or state issued ID number as a security measure to help protect your identity and fight tax fraud.

Why do I need a driver’s license to file my taxes?

  • States match the information in their database to confirm the identity of the taxpayer, helping to prevent fraud. Currently, you do not need a driver’s license to file your federal tax return but you may need it to file with some states.

Do I need my ID to file my taxes?

The short answer is no; California driver’s license or state ID card information is not required to e-file a California tax return and tax returns will not be rejected if this information isn’t provided. They ask for your assistance to combat stolen-identity tax fraud and to protect taxpayers and their refunds.

Why does Turbotax need my driver’s license number?

In an effort to help protect your identity and fight tax fraud, the IRS and many state tax offices are now asking that tax filers provide their driver’s license or state issued ID number. Providing this info is not required to file your taxes.

What information does my tax preparer need?

Among the most important things a CPA, tax preparer, or tax preparation software will need to file your tax return are the full names and Social Security numbers, or tax identification numbers, of you, your spouse, and your dependents. The Social Security cards for all people included on your tax return.

Does IRS require drivers license to e file?

This is one reason why some states in recent years have required taxpayers to enter their driver’s license number on electronically-filed tax returns. The IRS does not require a driver’s license number on a federal tax return.

Can I file Turbotax without drivers license?

It is not necessary to provide ID information to file with Turbo Tax. It is merely an option.

What states require ID to e-file?

What states are requiring the information for electronically filed returns? At this time, only Alabama, Ohio and New York are requiring the driver’s license for electronically filing. California, Kansas, Louisiana, New Jersey, Pennsylvania, Virginia and Wisconsin, are requesting (but not requiring) the information.

What is the difference between enrolled agent and tax preparer?

Similar to a CPA, an enrolled agent is also a certified tax professional. However, an enrolled agent is a federally-authorized tax practitioner rather than a state-licensed professional. The most conspicuous difference between CPAs and enrolled agents is the relationship they have with taxpayers.

Do I need a CPA or tax preparer?

If your tax situation is easy enough you should use a tax return preparer because you will probably get no added value from using a CPA and will most likely pay less money to get your taxes done. A tax preparer can take your various income items, input them to tax return software, and press print.

Can a tax preparer prepare their own taxes?

More In Tax Pros. Any tax professional with an IRS Preparer Tax Identification Number (PTIN) is authorized to prepare federal tax returns. However, tax professionals have differing levels of skills, education and expertise.

Can I file my taxes with an expired ID?

You can still use it while expired, for return purposes. That won’t affect your return. It’s an additional measure to protect your identity but not required, in all states. There are only a couple states that require you to enter it in order to file.

Is eFile free?

The eFile.com Federal Basic Edition is always free. For more complicated tax returns, the tax service fee you pay is for the preparation of a tax return on eFile.com; e-Filing or printing tax returns is included or free.

Why do you need my driver’s license for my tax return?

State, local, federal, estate, and international taxation are all covered in detail in this guide. This is a question that you most likely asked when you met with your tax return preparer this year. What might possible be the connection between your tax return and your driver’s license? In order for a tax return to be electronically submitted, numerous states have made it a condition or a request that a driver’s license number (or other state identification number) be supplied into the tax software system.

When it comes to protecting you against identity theft, the IRS has been working with state tax agencies and the tax industry to improve the safeguards available to you.

States compare the information in their database to the information in the taxpayer’s file, therefore assisting in the prevention of fraud.

States that seek this information have the capability of matching driver’s license information with other identifying data in order to assist in confirming your identification.

California, Kansas, Louisiana, New Jersey, Pennsylvania, Virginia, and Wisconsin are among the states that have asked for (but not mandated) the information in question.

Tax software suppliers are sharing with the Internal Revenue Service (IRS) basic tax return information as well as additional data pieces from the tax software that suggest potential fraudulent practices that may emerge during the preparation of tax returns.

Because the Internal Revenue Service and state laws are continually changing, you should be prepared to include your driver’s license or state identification number with the documentation you regularly send to your tax return preparer when filing your return.

Use of driver’s license numbers raises security concerns

The Internal Revenue Service (IRS) now recommends that people utilize their driver’s license number to add an additional degree of protection when completing a federal tax return electronically. A driver’s license number, or an equivalent, is required for state returns in a few states, including New York, Ohio, and Alabama. This appears to be a good idea at first glance—adding another step of verification to assist avoid tax identity theft seems like a good idea. Nevertheless, as is the case with many other “wonderful ideas,” the unexpected effects might result in difficulties.

Despite the fact that most CPA firm personnel and clients have been educated to treat Social Security numbers (SSNs) with extreme caution, the same has not always been the case when it comes to driver’s license numbers (DLNs).

As discussed below, while the reasons for this growing importance of DLNs are understandable, the fact that they have become a new high-value item for criminals and CPA firms alike has made them a new high-value item.

Regulatory requirements

What is it about the possibility of a data breach involving driver’s license numbers that should cause alarm among accountants? It is the first for the simple fact that, while each of the 47 state and territory breach notification regulations is different, they all consider DLN and SSN to be equally vital pieces of personally identifying information (PII). While it is critical to consult with competent legal counsel to understand the specific breach laws that apply to your company, California’s definition of personal information in its civil code regarding customer records (Cal.

Code 1798.82) serves as an excellent example of what is meant by “personal information.” In particular, personal information includes, but is not limited to, the following types of information: (1) When neither the name nor the data components are encrypted, an individual’s first name or first initial and last name in conjunction with any one or more of the following data items is considered to be a unique identifier: (A) The individual’s Social Security number.

(B) The number on the back of your driver’s license or California identity card.

(D) Information pertaining to medical conditions.

As you can see, the driver’s license number is accorded the same importance as the Social Security number.

Views on driver’s license numbers

We emailed a few of questions to 15 of our non-CPA but college-educated colleagues to see how they would react if their driver’s license number was lost vs if their Social Security number was lost. The results revealed that they would react differently if their driver’s license number was lost. Though undoubtedly not scientific in nature, the responses they supplied give voice to sentiments that the authors have seen among those working in the subject. In response to Question 1: “What would you do if your Social Security card was stolen or lost?” “I’m going to freak out,” one of the selected responses.

Lost Social Security numbers (SSNs) are widely recognized as a severe hazard to identity fraud.

A poll with 29 respondents was performed anonymously by the authors in order to acquire insight into how CPA firms see this exposure.

Respondents came from a variety of backgrounds, including different degrees of seniority, different sizes of firms, and different geographical locations. These are not scientific findings, but they are nevertheless intriguing:

  • Although 55 percent of respondents stated that they were collecting DLNs, 35 percent were unaware that DLNs are considered personally identifiable information (PII). Nearly half of those surveyed were employing insecure means of acquiring DLNs from their clients
  • When asked if their consumers were aware that DLNs contained personally identifiable information, 72 percent said “no” or “not sure.”

The risk

It’s easy to imagine driver’s license numbers being a high-value target for hackers and other cybercriminals now that they’re being utilized as a form of identify verification for tax return filing purposes. And if accounting companies and their customers do not exercise caution in safeguarding DLNs and other personally identifiable information, the consequences can be severe and financially devastating. Data breaches may be extremely expensive, as demonstrated by the Ponemon Institute’s Cost of a Data Breach research from 2016.

  • When it comes to highly regulated businesses, the expenses are much greater, with an average cost of $221 per stolen or lost record in the financial services section.
  • Insurance can provide some protection, but not nearly as much as you might think in this situation.
  • CPA firms can obtain insurance for a variety of items, including credit monitoring for clients and forensic analysis of computer systems, malware removal and system restoration, among other things.
  • While the severity of the penalties varies from state to state, in certain states fines can easily exceed $100,000, and a violation of Internal Revenue Code Sec.

Partner action items

Most businesses are unable to educate the general population because of their size and scope. Even the Internal Revenue Service’s Taxpayer Guide to Identify Theft and IRS Publication 4524, Security Awareness Tips for Taxpayers, fail to address the need of preserving a DLN at this time. Resources should be dedicated toward educating employees on how to communicate effectively with clients, as well as on installing adequate security measures to reduce the likelihood of a breach. Train your employees in the following areas: If your company already offers training on internal firm regulations that deal with managing and keeping personally identifiable information (PII), make a point of emphasizing DLNs.

  1. As a result, your employees should be the primary point of contact for your clients, underlining the importance of the slight discomfort associated with correctly processing PII.
  2. Following the implementation of secure portals or encrypted email solutions to safeguard SSNs, it is just a question of teaching your team on how to best utilize the resources that they already have in their possession.
  3. With this connection, the client may send an image of their driver’s license over an encrypted tunnel, which keeps their DLN safe from prying eyes and other malicious characters on the internet.
  4. Solutions such as the Secure Messaging application from Mimecast allow you to send secure email communications to your clients while also allowing them to transmit personally identifiable information (PII) in an encrypted format.
  5. Simple and safe, a brief phone call to your customer to get a DLN adds a personal touch to a straightforward solution.
  6. Joseph Brunsman ([email protected]) is a vice president of Chesapeake Professional Liability Brokers, based in Annapolis, Maryland.
  7. Mr.

He is also a co-author of True Course: The Definitive Guide for CPA Practice Insurance, which was published in 2012. Byron Patrick ([email protected]) is the managing director of CPA practices for Network Alliance Inc., based in Reston, Va., and has more than 20 years of experience.

State Driver Licenses Information

The states of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Kansas, Louisiana, Maine, Maryland, Massachusettsachusetts, Maine, Maryland, Massachusettsachusetts, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota, Minnesota,

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Alabama

Alabama’s official statement is as follows: The Alabama Department of Revenue is dedicated to the battle against refund fraud involving stolen identities. In order to do this, the Department requests that the taxpayer’s driving license number or State Issued ID number, as well as the state that issued it, the issuance date, and the expiration date, be included with the tax return. If you fail to include any of this information, your return will be denied, and you will be required to file a paper return.

Alaska

From Colorado: The individual income tax form for the state of Colorado contains fields for the license/ID number last four characters, the state that issued the license or ID card, and the date the driver license or state-issued identification card was issued, for both the taxpayer and their spouse. If this information is not provided, it may result in a delay in the preparation of the tax return.

Connecticut

Connecticut’s official statement is as follows: In order to preserve taxpayer identifying information and to prevent money from being misappropriated, the Connecticut Department of Revenue Services (DRS) has made a commitment. The Department of Revenue Services (DRS) continues to step up its anti-fraud operations in collaboration with the Internal Revenue Service (IRS), other state tax authorities, and tax preparers. For the purpose of combating fraud, DRS would want each taxpayer (both primary and secondary) to submit their Driver’s license or state-issued identification information into the system.

Delaware

Hawaii’s official statement is that the driver’s license or identification card information is not required to be included with the tax return.

Idaho

A statement from the state of Illinois states that while a driver’s license or state identity card is not necessary, it is preferable if it is sent with the e-filed tax return. It can be used as a security precaution to aid in the prevention of identity theft and fraudulent transactions. It is expected that you will be requested to enter your driver’s license or state ID card information if no such information is accessible or offered in the program.

Indiana

Iowa’s statement is as follows: When e-filing your Iowa return, you have the option of using information from your driver’s license.

Providing the Iowa Department of Revenue with your driver’s license information assists the department in facilitating taxpayer identification verification. This option is not accessible for Iowa returns that are submitted on paper.

Kansas

A statement from the Kentucky Department of Revenue stated that the Kentucky Department of Revenue had added a field to the individual income tax return forms 740 and 740-EZ, as well as 740-NP and 740-NP-R, allowing taxpayers to provide their driver’s license or state issued ID number if they so desired. While it is not required to provide a driver’s license or state-issued identification number, doing so may help to expedite the return processing. The Kentucky Department of Revenue screens returns for tax fraud and identity theft issues using the driver’s license or state-issued ID number provided by the applicant.

Louisiana

A statement from Minnesota: Minnesota does not require information from state driver’s licenses or identification cards.

Mississippi

This is according to a statement from Mississippi:This filing season, several state revenue agencies will be collecting more information in an attempt to prevent stolen-identity tax fraud in order to safeguard you and your tax return. If you have a driver’s license or other state-issued identification card, please use it to supply the information that has been required. If you do not have a valid driver’s license or other government-issued identity, your return will not be refused. Providing the information will only aid in the processing of the return as a whole.

Missouri

Montana’s official statement is as follows: The Department of Revenue is asking extra information from your Montana driver’s license or ID card in order to prevent tax fraud involving stolen identities and to safeguard you and your return. You are not obligated to provide us with any information, but doing so will allow us to complete your taxes more quickly.

Nebraska

Tax returns in New Mexico are required to include the taxpayer’s driver license or state identification number, the state that issued it, and the issue date, or the word None as part of the New Mexico Taxation and Revenue Department’s security measures to protect taxpayers against identity theft related to refund fraud. If the Department does not receive this needed information, it deems the returns to be incomplete.

New York

To secure your identity and prevent tax fraud, several state revenue offices are demanding that filers supply their driver’s license or other state-issued identification number when filing their taxes. According to a statement from North Carolina: While supplying this information is strongly suggested, it is not necessary in order to file your North Carolina taxes and is thus not mandatory.

North Dakota

The state of Ohio has issued a statement saying that it, along with other states, would need driver’s license information for the principal taxpayer and spouse (if filing jointly) again in tax year 2019 in an effort to prevent tax fraud involving stolen identities. Those who pay taxes will be required to present information from their driver’s license or other state-issued photo identity card. Taxpayers who do not have a driver’s license or state identification card will be given the opportunity to declare this on their tax return and will still be able to e-file.

Click on the “Income – General Information” category and then the question “Why is the Department of Taxation asking information from my driver’s license or state ID card?” for further information.

Oklahoma

Statement from the State of Wisconsin:The State of Wisconsin is collecting additional information in an attempt to prevent stolen-identity tax fraud and guarantee that your tax refund is sent to you as soon as possible. Please supply the information asked from your driver’s license or other state-issued identity card as soon as possible. Even if you do not have a driver’s license or state-issued identity card, your return will be completed; nevertheless, giving this information will assist us in processing your return more quickly and efficiently.

Driver license requirement: Information for tax professionals

The state of New York mandates that you include your client’s driving license or non-driver ID information on their personal income tax return if you utilize software to complete their return. Neither the principal taxpayer nor the spouse are exempt from this requirement (if applicable). Because New York State does not allow tax preparation software to retain driver license information, you must input your client’s information each tax season. This rule applies to all driver licenses and non-driver identification cards from any state, including Washington.

  • The driver license or non-driver ID number
  • The issuing state
  • The issuance date
  • The expiration date
  • And the first three characters of the document number (for licenses and non-driver IDs issued by the State of New York only)
  • And the date of birth (if applicable).

If your customer does not have a driver’s license or non-driver ID (or if he or she is deceased), you can specify this in the program to ensure that this need is met.

IDs and documents

We accept information from your client’s most current driver’s license or non-driver ID as proof of identification. We will accept the return regardless of whether your client’s ID is active or expired.

How to locate ID and document numbers

The document numbers for New York State driver licenses and non-driver IDs are made up of either 8 or 10 alphanumeric characters, depending on the kind of license or ID (we only require the first three characters). Sample Photo Documents is a page maintained by the New York State Department of Motor Vehicles that shows the normal location of document numbers on New York State-issued licenses and identification cards.

Why we want this information

The information from a driving license and non-driver identification card will be used as identification verification to safeguard taxpayers from fraud and identity theft.

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Extensions

On the extension form, you can indicate that you did not have your client’s information when they filed their extension by checking the Did not give IDbox. When you subsequently e-file your return, you must include the information from your driver’s license or non-driver identification card.

Compliance

You are required to gather this information from your clients under the laws of New York State.

If your client won’t disclose their ID information

Alternatively, if your customer refuses to supply their information, you can tick the option indicating that your client does not have an ID.

If your client declines to supply you with their information, you must retain documentation to demonstrate that you exercised reasonable care to get the information and that your client declined to cooperate.

If you don’t include your client’s ID information

We utilize their ID information to assist us in validating their identification; if we are unable to authenticate your client’s identity, their refund may be subject to a delay.

If your client has an out-of-state ID

As long as your customer provides a genuine out-of-state identification card, they should not face any processing delays as a result of their identification card.

Resources

  • For the tax year 2020, Publication 93, New York State’s Modernized e-File (MeF) Guide for Return Preparers, is available. More information on the e-filing mandate for tax preparers
  • Resources for tax professionals

Avoid the Rush: Some Taxpayers May Need Prior-Year Tax Data

IR-2018-30 was published on February 16, 2018. WASHINGTON — The U.S. Department of State has issued a statement saying that The Internal Revenue Service warned taxpayers who have switched tax software programs today that they may require information from their 2016 tax return in order to complete their taxes for the current tax season. It’s usually a good idea to maintain copies of tax returns that have already been filed. This tip is particularly relevant this year because, for some taxpayers, information from their 2016 tax return – specifically, their adjusted gross income – will be required in order to confirm their electronic signature on their 2017 tax return, which is due on April 17.

  • However, the days surrounding Presidents Day are the busiest of the year for the Internal Revenue Service, and there are online solutions that are both faster and more comfortable for taxpayers to use.
  • Alternatively, people may attempt to find their 2016 tax return using the tax preparation software or tax return preparer they used the prior year.
  • It is via the use of an electronic signature that the taxpayer certifies that the information on the tax return is truthful and accurate.
  • One way they do this is by validating the electronic signature with prior-year adjusted gross income.
  • It is possible, however, that taxpayers who are using a new tax software program for the first time will have to enter their information manually.
  • Taxpayers can electronically sign their returns by generating a four-digit Personal Identification Number (PIN), also known as a Self-Select PIN, which they can use to sign their returns. Taxpayers must input their birthdates as well as either their adjusted gross income from the prior-year return or their prior-year Self-Select PIN in order to authenticate their e-signature PIN. Providing that individuals have retained a copy of their prior-year tax return, performing this chore should be straightforward. The Adjusted Gross Income (AGI) is reported on line 37 of Form 1040, line 21 of Form 1040-A, and line 4 of Form 1040-EZ for the 2016 tax year. It is possible for taxpayers to receive a copy of their 2016 tax return from their prior year’s tax preparation software or from a previous tax preparer if they do not have access to their 2016 tax return. Taxpayers can also get a tax transcript from the Internal Revenue Service (IRS) online.
  • Get Transcript Online is a service that allows you to view your AGI immediately. Taxpayers must pass the Secure Accessidentity verification procedure in order to file their returns. You should utilize just the “Adjusted Gross Income” line item on your tax return transcript. To obtain a Tax Return Transcript by Mailor, call 800-908-9946. Taxpayers who are unable to use Secure Access and who need to seek a Tax Return Transcript can do so through the mail. Delivery should take between 5 and 10 days. Only the “Adjusted Gross Income” line item should be used.

Taxpayers who have been assigned an Identity Protection (IP) PIN should input it when requested by the program to enter an IP PIN for identification purposes. The IP PIN will be used to authenticate the taxpayer’s identification during the taxation process. If the taxpayer has never filed a tax return before and is under the age of 16, the AGI should be zero. As a result of the Security Summit effort, the Internal Revenue Service, state tax agencies, and the tax industry have made significant strides in the fight against tax-related identity theft.

  1. They are well aware that simply obtaining a person’s name, address, and Social Security number will not suffice to commit tax fraud on their behalf.
  2. States can use the driver’s license database to connect taxpayers with their driver’s licenses, assisting in the validation of the return.
  3. Taxpayers are required to fill out the form with one of the three options listed above.
  4. It is important for taxpayers and tax professionals to provide additional information when asked for it, such as a driver’s license number, in order to prevent tax-related identity theft.

When it comes to ensuring that refunds are only given to authorized taxpayers, identification validation and identity proofing are critical.

Here’s the Skinny on Driver’s License Information for State Tax Returns

It has likely come to your attention that numerous states have made it mandatory or requested that a driving license number (or equivalent state identification number) be inputted into the tax software system in order for the return to be electronically submitted. As practitioners, you are most certainly aware of the rationale behind the request — this information assists states in verifying the identification of taxpayers, which helps to reduce identity theft in the process. The mechanics of acquiring the information and communicating this necessity to your clients, on the other hand, may prove to be a significant challenge.

  1. Why am I being asked for the driver’s license number of a client of mine?
  2. The reasoning for this is because while a thief may have access to a taxpayer’s name and Social Security number, they are unlikely to have access to their driving license number.
  3. Is it necessary to have a driver’s license or other state-issued identification in order to submit a federal tax return?
  4. What states have enacted legislation requiring this information for taxes submitted electronically?
  5. California, Kansas, Louisiana, New Jersey, Pennsylvania, Virginia, and Wisconsin are among the states that have asked for (but not mandated) the information in question.
  6. The state tax department in the client’s home state will be the most reliable source of further information.
  7. A driver’s license number or a state identity card number will be required in the event of an electronic New York extension filed through the state website.

As a result, there is no need to file a separate extension in Alabama or Ohio because both states recognize the federal extension.

This will differ from state to state.

If the taxpayer’s license or identification card is a New York driving license or non-driver identification card, the document number contained on the license or identification card must also be included.

My tax software is requesting this information, however my customer does not file in any of the states that require this information.

If you already have the information and your customer is aware that you will be utilizing it to submit their tax return, entering it into the program would be the most straightforward option.

Check with your software supplier to see if any more information is required in order to process the return.

My client is a taxpayer in a state where a driver’s license is required to be filed, but they do not have a driver’s license or other form of state identification with them at the time of filing.

There is an option to indicate that no identification is available for each of the states that need driving license information to be submitted.

What happens if I don’t supply the taxpayer’s driver’s license?

This will be determined by the state in question.

If, however, attempts to verify the taxpayer’s identification are unsuccessful, the processing of the refund may be delayed.

What is my other course of action?

In order to demonstrate that the preparer exercised adequate due effort in an attempt to collect the information and that the taxpayer refused to disclose it, they propose that contemporaneous records be maintained.

For my clients, what is the best approach for collecting and securing this information?

You should treat this information as secret, just as you would any other piece of confidential client information.

Furthermore, if your workplace is paperless, necessary precautions should be made to guarantee that the data is maintained in a safe and secure environment.

230 for a refresher on these topics.

The Association of International Certified Professional Accountants (AICPA) has hired April Walker, CPA, CGMA, as its Lead Technical Manager – Tax Practice and Ethics.

States Require Driver’s License for E-Filing Tax Returns

The 25th of January, 2017 Senior Tax Business Services ContributorVirginia Lee is a Senior Tax Business Services Contributor. Individual filers who are obliged to e-file their income tax returns shouldn’t be startled if their accountant informs them that she will demand a copy of their driver’s license or state identification card in order to complete their submission. More and more states are mandating tax return preparers to include driver’s license numbers (or another form of state-issued identification) on electronic submissions during 2017 tax filing season, as a move to prevent identity and refund theft.

This information may (on the plus side) assist state taxation authorities in processing tax returns more swiftly.

  • Alabama, California, Illinois, Kansas, Louisiana, New York, Ohio, Virginia, and Wisconsin are among the states represented.

For the time being, it is optional in New Jersey and Pennsylvania. While certain state preparation software systems may not require the ID in order to process returns, others may demand it in order to prepare returns regardless of the state filing requirements. For filers who are unsure whether or not this is required by their service provider, they should contact that provider for clarification. A driver’s license or other state-issued identification is not now necessary in order to submit a federal tax return.

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Joint filers will be required to produce identification for both spouses when filing jointly.

ADDITIONAL RESOURCES ARE AVAILABLE

Identify Yourself! Or Not. Use Alternative Forms of Verification

Please do not become irritated with your tax preparer since he or she is only performing their job. In an effort to combat identity theft, the Internal Revenue Service (IRS) is increasing compliance efforts and mandating identification verification on tax returns. To be filed with the tax return, tax practitioners must now complete a ‘due diligence’ form showing that the client’s identification was confirmed and which procedures were employed to do so.

Why does the IRS need my driver license?

Aside from identifying and combating identity theft, the main purpose of this method is to determine the state of residence of taxpayers. The most common form of identification is a driver’s license or a state-issued identification card. The latter is identical to a driver’s license, except that you do not have to pass a driving test to obtain it. a person who is not a driver A state identification card can be used as “proof of identity.” – The information about a driver’s license or state identification card is recorded into the federal tax return, and the information is then forwarded to the state that issued the document.

It is important to note that not all United States citizens residing overseas are subject to state tax filing obligations. Several governments recognize foreign assignment as a legitimate justification for the termination of state residence.

Therefore, we do not require that you upload a U.S. Driver license.

Although you may be completely entitled to avoid submitting a state tax return, including a copy of your US driver’s license with your tax return may open the door to a bag of worms, forcing you to (right) argue that you do not need to file a state tax return. Avoid this difficulty by use one of the alternate modes of verification described below.

Are there any other methods to verify my identity besides a US driver license?

If you do not have a utility bill or a statement from your banking institution, the IRS will accept your credit card billing statement as an alternate source of identification verification. It is OK if the document contains an address that is not in the United States; nevertheless, we prefer that the document have an address that matches the address on your tax return. A passport (whether from the United States or another country) is also accepted. It is important to note that papers issued by an employer that reflect income do not qualify for identity verification.

The utility bill and the credit card statement

Can I skip this whole ordeal? This seems intrusive.

If the identity verification information is not completed, e-filing will be rendered impossible. Generally, tax returns filed on paper without identification verification will be delayed in processing, and the IRS will send a follow-up request for an identification verification document.If you are required to file state tax returns, please be aware that some states do not allow electronic filing without identification verification, such as a valid United States driver license.

Is this required for prior years?

No, identification verification is not necessary for tax returns filed before to 2016.

Where will this information go? Will this increase the odds of getting audited?

According to the Internal Revenue Service, the information will remain inside the IRS and the states. The likelihood of an audit is not tied to the document verification process. In an era of growing identity theft, these new techniques are an attempt to uncover trends that indicate that a tax return may have been submitted by someone other than the taxpayer and that the return may be false. TFX was founded by Ines Zemelman, EA.

Three Things You May Need In Order To E-File Your Tax Return

Protective measures are being put in place by the Internal Revenue Service and some states to fight tax-related identity theft and refund fraud ahead of the 2016 tax filing season, which began Tuesday. However, providing more information to authenticate your identity and delays in processing refunds may be required to combat fraudulent returns. From 2011 to October 2014, fraudulent refunds totaled $5.8 billion, and these measures are important to reduce this figure. You should keep the following points in mind if you plan to submit your federal or state income tax return electronically.

  • Certain significant payroll service providers, such as ADP and Paychex, have collaborated with the IRS to add a 16-digit verification code on some Form W-2s.
  • If the field is already filled in, the IRS will request that preparers input the code.
  • In order to evaluate the code’s capacity to check the legitimacy of W-2 data during this filing season, it is only being utilized for this filing season.
  • In some states, you may be required to provide your driver’s license number in order to file.
  • In the majority of states, supplying a driver’s license number is entirely optional.
  • There may be some problems to sort out as the IRS, states, and tax software vendors work out the quirks of these new rules.
  • Taxpayers who have been victims of tax-related identity theft will receive an Identity Protection PIN (IP PIN) in the mail from the IRS.
  • Due to an error in the year mentioned on the IP PIN letters, some taxpayers have received them.
  • The IP PIN is valid for use on individual tax returns filed in 2016.

At this time, the IP PIN program is only available to taxpayers who have been victims of tax-related identity theft, taxpayers who filed federal returns as residents of Florida, Georgia, or the District of Columbia in the previous year, and taxpayers who have received an IRS letter inviting them to “opt-in” to receive an IP PIN in the future.

Driver’s license information now required on some state e-filed returns

Paul Bonner contributed to this article. It is becoming increasingly clear to tax return preparers that several state income tax returns for 2016 require information from a taxpayer’s driver’s license or state-issued identity card before the returns can be e-filed. Although driver’s licenses and state identification cards are not required for federal returns, the National Security Summit sponsored by the Internal Revenue Service, state taxing authorities, the tax software industry, and other stakeholders recommended using driver’s licenses and state identification cards as an additional factor in authenticating taxpayers’ identities to deter fraudulent electronically filed returns last year.

This information is requested by a number of states.

According to a website maintained by the New York State Department of Taxation and Finance, taxpayers who have been issued a driver’s license or state-issued identification card from any state in the United States are now required to include with an e-filed New York state return the license or card’s ID number, issuing state, issuance date, and expiration date.

  • Previously, providing the requested information was entirely optional.
  • Taxpayers who do not have a driver’s license or a state-issued identity card can declare this by ticking a box on the tax return.
  • A spokeswoman for the New York Department of Taxation and Finance verified practitioners’ allegations that taxpayers who hold a license or state ID were not permitted to fail or decline to disclose the information of their license or state ID on an e-filed return.
  • It is not necessary to provide this information on a paper-filed return because it does not show on a copy of the return.
  • A driver’s license number is required for e-filed Alabama income tax returns in 2016, according to the Alabama Department of Revenue’s web site.

If the department is able to locate a match, the return is “rated higher for identification confidence.” If the department does not discover a match, it will use various measures “to attempt to identify whether or not the true taxpayer submitted the return.” If you submit your tax return using a state-run filing portal, commercial tax preparation software, or both, some states offer you a personal identification number (PIN) that you must use in conjunction with your driver’s license or state ID number to complete the transaction.

In Illinois, for example, a driver’s license or state identification card issued by the state is required in order to receive a PIN, and taxpayers may (and first-time filers must) e-file using their driver’s license or state identification card information.

Though it is not necessary to provide a driver’s license or state identification number on federal returns as previously stated, IRS Publication 1345,Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns, states that electronic return originators (EROs) must inspect and compare a valid government picture identification with the applicant when verifying taxpayers’ identities for the purpose of conducting an in-person signing of an electronic return.

In contrast, preparers who deal with taxpayers from a distance, particularly those who are not intimately acquainted with them, may not have this information on file and may have to obtain it from them, increasing the amount of time it takes to file a tax return.

“It’s a significant issue,” said Howard Arem, a certified public accountant at KleinArem Associates LLC in Jericho, New York.

Smith added that some clients have expressed skepticism about the possibility that storing driver’s license data with other tax return information may really raise the risk or repercussions of identity theft.

Calling a customer to collect the information is also less than ideal, he explained, because the licenses are “difficult to see” and communications, which are frequently made over a cellphone, are less than reliable.

He provided an example from his own firm. It was written down and entered on the return flight, and he hoped the transaction had gone through. — Paul Bonner ([email protected]) works as a senior editor for Tax Advisers.

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