How the Grinch Stole Your Identity and Tax Refund

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By the HCM Service Team

With the holiday online shopping season upon us and tax filing season coming up quickly in January, many people will be using sensitive financial information on their computers, and it’s important to ensure that your personal data is protected. Take the time to make sure that your security software is up-to-date with firewall and anti-virus protection, use strong passwords, and learn to recognize and avoid suspicious phishing emails.

In addition to these precautions, PlanSource HCM clients will have another line of defense against scammers. To combat the rising number of fraudulent tax returns, the IRS has offered a pilot program for 2016 that will provide an additional layer of protection against tax refund fraud.

All PlanSource HCM clients have been opted IN to this pilot program which will ensure your employees are the only people filing their W-2’s with the IRS. Each W-2 will have a unique, randomly generated 16-digit verification code that will be used to verify the integrity of the data when the employee electronically submits their federal tax return.

Q: What is the IRS W-2 verification code program?
A: In its second year of testing, the IRS W-2 verification code program is designed to verify Form W-2 data submitted by taxpayers on their e-filed tax returns. Currently, the IRS is working with select payroll service providers to help you, as an employer, prevent tax-related identity theft and fraud for your employees.

Check out more information on the IRS website here and here.

Q: What is a W-2 verification code?
A: The verification code is a unique, randomly-generated 16-digit code that will display on each employee’s Form W-2 in the former Box 9, labeled Verification Code, on Copy B (federal copy) and Copy C (for employee records).  The IRS then uses this code to verify the integrity of the data when the employee electronically submits his or her personal federal tax return. This program is free for employers.  

Q: What are the benefits?
A: Employers can offer their employees an additional layer of security to protect their personally identifiable information (PII), prevent identify theft, and tax fraud.

Q: What is the impact to year end forms?
A:  The code will be displayed in four groups of four alphanumeric characters, separated by hyphens. Example: XXXX-XXXX-XXXX-XXXX. The W-2 SSA magnetic media file is not impacted.

The program only applies to electronically-filed employee federal tax returns. There will be no impact on employer filings with the Social Security Administration. During the pilot program, there will be no negative impact on employee filings with the IRS nor will this pilot affect employee state and local income tax returns.

With this extra layer of protection in addition to increased vigilance about your personal data, you can stop Grinch scammers from stealing your identity and your tax refund, so you can celebrate the holiday season in peace.

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