Treatment of Identity Theft Returns Clarified

The IRS Office of Chief Counsel (OCC) explained in a memorandum to Small Business/Self-Employed Division attorneys what the IRS can do when a return is filed by an identity thief in order to generate a fraudulent refund and the IRS has issued a statutory notice of deficiency based on that fraudulent return (Program Manager Technical Advice (PMTA) 2012-13).

The PMTA first explained that a return filed by an identity thief is not a valid return because it is not filed by the true taxpayer or with the true taxpayer’s consent and it lacks a valid signature. This is a position the OCC has taken in prior guidance.