2018 ERO Compliance Training RETURNING CLIENTS FEE COLLECT

Transcription

1 07/13/2017 Version ERO Compliance Training RETURNING CLIENTS FEE COLLECT B

2 SECTION ONE: 2018 Fee Collect Program In partnership with your software provider and Santa Barbara Tax Products Group (TPG), you have elected to provide Fee Collect options to your clients. Our portfolio of financial services and our commitment to customer service will help you grow your business. We have summarized the Fee Collect Program below, but please refer to your software website for additional detailed information. The Fee Collect program offers a client product in which you can collect your fees directly from the taxpayer refund. Your client will get their refund faster and you can rest easy knowing that you will get paid at the same time they get their refund. This product is not a loan or a refund transfer. All you have to do is file the return electronically and have the client sign a simple authorization allowing you to take out your fees. Based upon our instructions, the bank does the rest, depositing your fees directly to your designated bank account and depositing the remainder of the refund directly to the client s account. It doesn t get any easier or any more automatic. And best of all, you pay a flat rate per tax return for this service far less than it would cost you to collect your fees from a slow-paying client. This is not a loan. The funds are deposited only when the IRS pays the refund, which is normally less than 21 days of filing the return. If the IRS withholds the refund for some reason, then you don t pay for the Fee Collect service. What's in it for you? Business Growth: Accept more clients, including those you would typically turn away. Payment Assurance: Lower risk of slow or no pays by having your fees taken out of the refund. Fast Collections: Save time by eliminating collections work. Improved Cash Flow: Receive payment when your client gets their refund. Nominal Fee: Flat fee per transaction is a fraction of the cost of doing collections. What's in it for your clients? Fast Refund: Get refund sooner than traditional mail. Financial Convenience: No out-of-pocket cost to get return done. Trusted Accuracy: Confidence because you prepared their return. Offer the Fee Collect Product Fairly

3 Explain the timing and costs associated with the fee collect product in comparison to the IRS options. It is your responsibility to ensure that the taxpayer understands the IRS disbursement options, in which the taxpayer can have their refund deposited directly into their personal bank account or as a check mailed to their home for FREE with paid tax preparation. Explain that taxpayers generally choose a fee collect product so they can have their taxes professionally prepared and pay tax preparation fees with their refund money. Filing Method Tax product Disbursement Estimated Availability of Funds** Deposit Product Fee Paper Return None IRS Direct Deposit or IRS Issued Check 5 to 7 weeks None E-File None IRS Direct Deposit Less than 21 days None E-File None IRS issued Check 21 to 28 days None E-File Fee Collect* Direct Deposit Less than 21 days None * Only a Fee Collect allows the tax preparer s fees to be paid from the refund. The IRS cannot process tax preparer s fees. **The PATH Act (Protecting Americans from Tax Hikes) legislation may create funding delays of up to six weeks or more for taxpayers filing at the beginning of the tax season. Please remember to explain all fees clearly and ensure that the taxpayer understands that the preparation fee will be deducted from the proceeds of their refund. BE FAIR AND CLEAR. Please remember to explain all options available to the taxpayer. 1. Do not pressure the taxpayer(s) into choosing a particular product. 2. Do not ask the taxpayer(s) what option they want before explaining all of the options available to them. 3. Do not pick any option or options for the taxpayer(s). 4. Do not encourage or discourage an applicant from using the Fee Collect product only present the information and allow the customer to make their own decisions.

4 Please utilize our translated product forms when explaining product details to Spanish speaking clients. These forms are available for download by going to the website ( Spanish translations of product forms are provided for your and your clients convenience. All contracts are in the English language, and English is the controlling language in all contracts. Any non-english translation provided may not accurately represent the information in the original English. MAKE SURE WE CAN CONTACT YOU. From time to time, TPG personnel may need to reach you regarding new products available to you, compliance-related matters, or for other business reasons. Please ensure that your contact information is up to date, including phone number and address, so that if we need to reach you we can.

5 Question 1: Is the following statement True or False? If the taxpayer chooses to use the Fee Collect on a refund due return, they will NOT have to pay the tax preparer s fees out-of-pocket as TPG will deduct them from their tax refund. a) True Correct. The Fee Collect product allows the taxpayer to pay for their tax preparation fee out of their tax refund. b) False Question 2: Before accepting a customer s decision to use a Fee Collect, you are required to explain all options available to the customer. These options include IRS Free options. According to the financial services agreement, you agree to present all disbursement options, including free options available with the IRS, to the tax payer. You should also do which of the following when explaining the Fee Collect product to taxpayers? a) Highlight the positive features of the Fee Collect Product and encourage the taxpayer to use this option. I will not recommend the IRS options since they are already posted on the IRS website. b) I will properly explain all options, including the IRS free filing options, to the taxpayer. I will not pressure, encourage or discourage a customer into using a Fee Collect product. I will only present the information and will allow the taxpayer(s) to make their own decision. Correct. The Financial Services Agreement requires that all options are provided to the taxpayer(s).

6 Question 3: As stated in the Financial Services Agreement, you confirm that you will provide the taxpayer the proper product forms associated with using a Fee Collect product and will retain signed copies on file in your office for TPG review, if requested. The product forms include the following: Fee Collect Deposit and Payment Authorization Form and the IRS 7216 use and disclosure forms. Which of the following statements are true? a) I am required to explain all product options to the taxpayer before proceeding with the Fee Collect product. This includes description for free product options. I am also required to retain signed documentation, such as the Fee Collect Deposit and Payment Authorization Form. I will be required to submit this to TPG if requested. Correct. The Financial Services Agreement requires that you provide the taxpayer all product options (including free product filing options) before proceeding with a tax product. Additionally, you are required to retain signed customer forms. b) I am required to explain all product options to the taxpayer before proceeding with the Fee Collect product. This includes description for free product options. I am also required to obtain signed documentation; however, I do not need to retain this on file.

7 Question 4: You are responsible for insuring that each taxpayer has had ample opportunity to read the product documentation and the disclosures before the tax return is submitted. Do not steer or pressure the customer into using a Fee Collect product. Please also ensure that the taxpayer signs all tax product documentation. When should taxpayers sign the documentation? a) After the Fee Collect Deposit and Payment Authorization form has been transmitted. b) After the tax return has been transmitted. c) After they have reviewed all the documentation but before the tax return and Fee Collect Deposit and Payment Authorization form are transmitted. Correct. The tax professional is required to obtain taxpayer signatures on the Fee Collect Deposit and Payment Authorization form before the forms are transmitted for processing. The tax professional should insure that the taxpayer has had ample time to read through the documentation and disclosures. d) Before they leave your office.

8 SECTION TWO: General Best Practices We are excited to partner with you in the coming tax season and we have provided a few tips to help your office stay current with general policies and procedures. Please take extra precaution to guard your office from unauthorized access. Guard access to the office. Remember that the office contains confidential information about taxpayers. Take the necessary precautions to make sure unauthorized access does not occur. All office and access doors MUST be locked when employees are offsite. As a standard practice, do not leave office keys in visible view and limit office access. When guests are onsite, please use monitoring practices, such as use of a guest pass or visitor log. Never allow guests to freely roam the office while unattended. If an employee is terminated during tax season, the locks and any IDs or passwords should be changed to prevent unauthorized access to the office(s).

9 Protect Your Customers Information The Gramm-Leach-Bliley Act of 1999 (GLBA) sets forth standards to protect customer information stored in electronic form as well as paper-based records. As part of regulatory compliance and TPG Best Practices, you should take every precaution reasonably necessary to safeguard taxpayer confidential information. Confidential information includes, but is not limited to, the following: Taxpayer Names Social Security Numbers Dates of birth Addresses Phone numbers Financial information such as loans and/or bank accounts Employer names and phone numbers Tax information Bankruptcy information The TPG User Guide identifies the following Best Practice recommendations to safeguard electronic and physical client information: To Protect Electronic Documentation: Password protect all computers that store client information Use complex passwords and keep confidential (i.e. do not share passwords among staff). Limit computers storing customer information to authorized users. Set up computer screens away from public view. If utilizing portable media use encryption. Lock computers when not in use or when not monitored. All computers used in the preparation of customer tax returns must run a regularly updated anti-virus software program (e.g. Symantec, McAfee, and Microsoft Security Essentials). All computers used in the preparation of customer tax returns must be protected by a hardware or software firewall (e.g. router, Windows Firewall, Zone Alarm). All computers used in the preparation of customer tax returns must store customer data in an encrypted format.

10 All computers used in the preparation of customer tax returns must provide secure file transfer capability (e.g. HTTPS, SFTP, FTPS). To Protect Physical Documentation: Safeguard physical customer files by utilizing a locked storage cabinet or drawer. Do not leave customer information lying in plain sight. Monitor visitors while onsite. Shred all confidential documentation before trashing. Whether you re handing over paperwork, or providing taxpayer information over the phone, it s important to verify you re talking to the actual taxpayer before doing so. Obtain information about the customer before releasing any confidential information. Additionally, before releasing documentation, you are required to reverify the taxpayer through photo identification. In today s technology-saturated world, it becomes increasingly important to know how to recognize phishing schemes. Phishing is a method fraudsters use to steal information by posing as a legitimate organization, often over the phone or via . For your protection and the protection of your clients, use the following tips to help ensure you don t become a victim: Never give out sensitive information under pressure if the source seems untrustworthy. If an , call, or piece of mail is received that seems suspicious, question its source. When in doubt, contact the correct company directly and confirm if the request was real. The following are qualities that may indicate a phishing attempt: o An or call that seems generic or not personalized, for example failing to reference an account you have o A piece of communication received requests personal passwords o An is poorly written or contains low quality images of a company s logos Do not click on links or download attachments from unknown or suspicious seeming s. Keep your computer protected with an antivirus to block cyber-attacks. Keep up-to-date with the latest industry trends on this topic through the IRS and news sources. Notify TPG and Affected Customers

11 If a customer s information becomes compromised in any way, you are required to notify TPG immediately and the affected customers. If you think an unauthorized person has obtained, or is attempting to obtain taxpayer information, it is important to respond quickly. Contact TPG immediately. If confidential information was compromised, you need to contact those customers who were affected. In accordance with the Financial Services Agreement, you should implement the procedures and controls described in IRS Publication 4600 Safeguarding Taxpayer Data: A Guide for Your Business available on the IRS website.

12 Question 5: As referenced in the TPG User Manual, you agree that you will take every reasonable precaution to safeguard electronic and physical customer information. This supports the requirements specified in the regulation called the Gramm-Leach Bliley Act of 1999 (GLBA). Which of the processes below describe and support procedures that could be used to protect client information? a) Utilize secured storage options to file physical customer information, such as locked drawers or cabinets. b) Monitor visitors while they are onsite. c) Encrypt and password protect all computers or electronic media devices which store electronic customer information and do not share passwords. d) Use regularly updated anti-virus and firewalls for software and hardware storing confidential client information. e) All of the above procedures will help to protect customer information. Correct. All of the above precautions are best practices which can be utilized to protect customer information.

13 Question 6: In the event of a data breach, such as unauthorized access to your computer or lost physical files or media devices, you agree to implement the procedures and controls described in IRS Publication 4600 Safeguarding Taxpayer Data: A Guide for Your Business, which is available on the IRS website. Additionally, you agree to take which of the following actions? a) Do not alert anyone until you have proof of fraudulent activity, such as confirmed identity theft. b) Immediately contact TPG and those customers that were affected. Correct. The TPG User Manual requires that you notify TPG and all customers that were affected by the data breach. This is required in addition to implementing the procedures and controls described in IRS Publication c) None of the above procedures are correct. d) All of the above procedures are correct.

14 Question 7: Before providing confidential client information via telephone you are required to validate the caller. Additionally, if the taxpayer comes back to the office to pick up their refund check, you agree to validate the taxpayer s identity before distributing the refund check. a) The Statement is True Correct. You must validate the client identity before releasing any information via telephone. Additionally, you must validate the customer before releasing payment. This can be accomplished by viewing the photo identification of the taxpayer. b) The Statement is False

15 SECTION THREE: Identify the Taxpayer before Filing the Tax Return YOU ARE RESPONSIBLE TO KNOW YOUR CUSTOMER TPG is committed to ensuring that neither we nor you as an ERO participate in the submission of fraudulent tax returns to the IRS. It is essential, therefore, that you undertake reasonable efforts to ensure that the taxpayer whose refunds you will be submitting via TPG and its Banks, is, in fact, the correct taxpayer to be submitting the return, and that the return is accurate, and that you reasonable have identified and verified the identity of the taxpayer using your service. FRAUD/ANTI-MONEY LAUNDERING CONTROLS You should not file a tax return if you suspect fraudulent activity. The number of fraudulent tax returns filed electronically continues to increase each year. Below is a list of possible fraud indicators. This is not intended to imply that every return with one or more of the following characteristics is fraudulent. It will be considered good business practice, however, to verify or validate data that might be considered questionable. Taxpayers are disqualified from applying for financial products if the tax preparer cannot obtain or verify the required information. Possible Taxpayer Fraud Indicators: Documents provided for identification appear to have been altered or forged. Photograph or physical description on the identification is not consistent with the appearance of the applicant or customer presenting the identification. Other information on the identification is not consistent with information given for tax return preparation. Taxpayer cannot be reached at the phone number given. Taxpayer cannot produce any mail or written documentation with their reported name and address. Taxpayer appears to be following a script. Suspicious person accompanying filer and observed on previous occasions. Possible Social Security Card Fraud Indicators: Social Security number that has any of the three groups all zeros

16 Social Security number that has the first three numbers above 900 Social Security number that has the first three numbers of 666 Possible Forms W-2, Forms 1099 and Forms 4852 Fraud Indicators: Forms that are typed, with strikeouts, erasures, white outs or type-overs Forms that are handwritten or photocopied Forms that are incomplete or altered Forms that contain errors in income or SSN Taxpayer presents employer s copy of W-2 Employer Identification Number (EIN) is not nine digits or is missing Dollar signs used on the W-2s or 1099s No cents are indicated (e.g. 5,000 is shown, instead of ) Federal Withholding is greater than 20% of W-2 box 1 wages W-2s for a firm in the area differs from other W-2s issued from the same firm Possible Tax Return Fraud Indicators: Maximum EITC is claimed but taxpayer is unable to supply required information on dependent or spouse/other parent Claiming dependents other than their own children or grandchildren with no supporting documents An unusually high number of dependents born during the year A high number of returns claiming almost the maximum Earned Income Credit An unusually high number of refunds over $2000 Many returns with identical income, withholding, refunds, or EINs on multiple W-2s The definition of Money Laundering is: The process of converting illegally-obtained funds into clean funds. A primary method utilized by money launderers is introducing the illicit funds into the mainstream financial system and moving the funds via a variety of techniques to make them appear clean The risk of introducing illegally obtained funds into the banking system can be identified in our program as identity theft and tax return fraud. Below are the steps you must take to properly identify the customer and to prevent fraud.

17 To protect yourself from processing invalid tax returns, you are responsible to validate the identity of your client before filing a tax return. Best practice processes to verify your customer s identity can be accomplished through the following procedures: Collect customer demographic information: - Name - Physical address - Tax Identification Number and - Date of birth Verify the information through documentation: - Unexpired government issued photo identification - Supporting documents for the Tax Identification Number (i.e. social security cards) - Tax documentation such as W-2s or 1099s The identity of each taxpayer and dependent should be verified to a reasonable and practical extent. If you are suspicious of the client s identity, perform additional due diligence by asking to see additional information. As part of the financial services agreement, you agree to carefully review the identity of each taxpayer before filing the tax return. Employees and business partners responsible for filing tax returns need to be aware of these due diligence procedures. You should not file the tax return if you cannot verify the taxpayer s identity. a) Question 8: To ensure you are not facilitating possible fraud and/or money laundering, you agree to create and implement the following: A Taxpayer identification program to identify and validate the identity of each taxpayer and dependent. Identity will be validated through documentary and non-documentary methods for each member listed on the return. Correct..

18 b) A Taxpayer Identification Program to validate the identity of each taxpayer and dependent. Identity should be validated by reviewing the taxpayer (and any dependent s) government issued identification. This identification does not need to include a photograph. c) A Taxpayer Identification Program to validate the identity of each taxpayer and dependent. Identity should be validated by reviewing the social security cards for each applicant. No other information should be validated.

19 Question 9: As part of your financial services agreement, you agree that you will collect and validate which of the following pieces of taxpayer information before filing the tax return? a) Ask the taxpayer for their name, address, telephone number, and W-2 forms; b) Review the taxpayer (and any dependent s) expired government issued identification to validate their identity; c) At minimum, the taxpayer should provide their name, physical address, tax identification number, and date of birth. The tax professional must validate this information by reviewing at least one form of unexpired government issued photo identification. Additionally, the tax professional must review the social security cards for the primary and secondary filers, as well as all dependent children listed on the tax return. Correct. To properly validate the identity of your client, you should collect the name, physical address, tax identification number, and date of birth. Additionally, you should review at least one unexpired government issued photo identification and the social security cards for each individual listed on the tax return.

20 Question 10: If you are presented fraudulent or suspicious documentation and cannot reasonably confirm the identity of the taxpayer, you agree that you will do which of the following? a) Perform additional due diligence by asking for additional verification, such as asking for utility bills, credit cards, or personal references. You should also verify sources of income and validate data that looks questionable. b) If you suspect fraud, you should refuse to file the return. c) All of the above answers are correct. Correct. If you are suspicious of the identity of the client, ask for additional verification such as utility bills, credit cards or personal references. You should also scrutinize income documentation such as W-2s and other subjective or non-verifiable data used on forms and schedules. If the tax return information looks suspicious, verify sources of income and validate data that looks questionable. You can also contact TPG and ask to speak with our risk department. If you suspect fraud, you should not file the return. Filing a return when you suspect fraud could result in your being inactivated from our program.

21 SECTION FOUR: Certification In order for Enrollment to be activated, please have ALL employees, contractors or others under your EFIN, who will be offering or discussing tax products with customers to successfully complete the online compliance training. I CERTIFY THAT I HAVE READ, UNDERSTAND AND AGREE TO ABIDE BY THE TERMS PROVIDED TO ME IN THE COMPLIANCE TRAINING. Yes No

22 [Pop Up Hint:] **Applies to Questions #1-4 What methods should I use to offer taxpayers the Fee Collect product? You should present all options to the taxpayer, including the free options provided by the IRS. Explain that taxpayers generally choose a Fee Collect product so they can have their taxes professionally prepared and pay tax preparation fees with their refund money. Additionally, a Fee Collect product allows unbanked customers the benefit of having their refund direct deposited rather than receiving a check in the mail from the IRS in 21 to 28 days. Please remember to ensure that each taxpayer has had ample opportunity to read the product Application and the disclosures before the tax return is submitted. Do not steer or pressure the customer into purchasing a tax product. Please also ensure that the taxpayer signs all tax product documentation. What is the timing difference related to using a Fee Collect product versus using the IRS options? Filing Method Tax product Disbursement Estimated Availability of Funds** Deposit Product Fee Paper Return None IRS Direct Deposit or IRS Issued Check 5 to 7 weeks None E-File None IRS Direct Deposit 10 to 21 days None E-File None IRS issued Check 21 to 28 days None E-File Fee Collect* Direct Deposit 10 to 21 days None * Only a Fee Collect allows the tax preparer s fees to be paid from the refund. The IRS cannot process tax preparer s fees. **The PATH Act (Protecting Americans from Tax Hikes) legislation may create funding delays of up to six weeks or more for taxpayers filing at the beginning of the tax season.

23 Do I need to give the taxpayer copies of the Fee Collect forms? Yes; you are supposed to provide the taxpayer a copy of the signed Fee Collect Deposit and Payment Authorization Form, together with any other supporting product documents (i.e. the tax return and 7216 consents to use and disclose forms). What documentation does TPG require that I retain? The Financial Services Agreement requires that you retain, with respect to each Customer: A paper or electronic copy of the Customer s signed Fee Collect product forms Copies of all the tax returns, W-2s, and (to the extent feasible) taxpayer identifications. Note: In some states retaining copies of identification is illegal, so please abide by your state legislation. How long do I need to retain the tax product documentation? We ask that you retain the tax product related documentation for a period of five (5) years. Upon request, the Financial Services Agreement requires that you deliver this tax product documentation to TPG within 48 hours. [Pop Up Hint:] **Applies to Questions #5-7 It is important that we work together to ensure that confidential taxpayer information is protected from unauthorized access by third parties. Tax professionals should utilize proper physical and electronic storage options to ensure that taxpayer information is restricted from unauthorized access. What is confidential client information? Confidential information includes, but is not limited to, the following: Taxpayer Names Social Security Numbers Dates of birth Addresses

24 Phone numbers Financial information such as loans and/or bank accounts Employer names and phone numbers Tax information Bankruptcy information How can I reasonably protect my client s physical information? Stay organized and make certain taxpayer paperwork is stored security away from public view. In order for paperwork to be secure in storage, it should be under lock and key. Always put away a customer s files before you begin working on another customer s account. Make sure that customers do not have access to areas where confidential information is stored. If transported between offices, files should be secured during transport (e.g. a car trunk). Make sure all paperwork is completely shredded before discarding. How can I reasonably protect my client s electronic information? Have safeguards in place to protect the files that are generated and stored on the computer. It is important to follow them and not deviate from policy when dealing with computers to prevent an unauthorized person from gaining access to or stealing the data on your computers. The following are standard practices adopted by most users: All computers used in the preparation of customer tax returns must require users to login to the operating system with a unique user ID and complex password before gaining access to the computer or tax preparation software. Do not share your passwords and make sure to log out of computers when you walk away from them. All laptop computers should utilize a cable lock for security. All computers used in the preparation of customer tax returns must run a regularly updated anti-virus software program (e.g. Symantec, McAfee, or Microsoft Security Essentials). All computers used in the preparation of customer tax returns must be protected by a hardware or software firewall (e.g. router, Windows Firewall, Zone Alarm). All computers used in the preparation of customer tax returns must store customer data in an encrypted format. All computers used in the preparation of customer tax returns must provide secure file transfer capability (e.g. HTTPS, SFTP, FTPS). What other safeguards can help protect the taxpayer?

25 Be aware of your surroundings before discussing a taxpayer s personal and confidential information whether in face to face settings or during phone calls. Create an environment in your office which allows for customer privacy. Best practice would be to have sound barriers in between customers so as to ensure privacy of conversation. Whether you re handing over paperwork or providing taxpayer information over the phone, it s important to verify you re talking to the actual taxpayer before doing so. Obtain a photo ID before turning any information over to the customer. Guard access to the office. Remember that the office contains confidential information about taxpayers. Take the necessary precautions to make sure unauthorized access does not occur. All office and access doors MUST be locked when employees are offsite. If an employee is terminated during tax season, the locks and any IDs or passwords should be changed to prevent unauthorized access to the office(s). What do I do in the event of a data breach? If you think an unauthorized person has obtained, or is attempting to obtain taxpayer information, it is important to respond quickly. Contact TPG immediately. If confidential information was compromised, you need to contact those customers who were affected. Federal laws are in place to ensure that the identity of individuals who open accounts with financial institutions can be verified and that unusual banking transactions are reported to the proper authorities. In accordance with the Financial Services Agreement, you should implement the procedures and controls described in IRS Publication 4600 Safeguarding Taxpayer Data: A Guide for Your Business available on the IRS website. [Pop Up Hint:] **Applies to Questions #8-10 The Taxpayer Identification Program is intended to provide a reasonable belief about the true identity of the applying customer. What do I need to collect? At minimum, the tax professional should collect the following identifying information from each customer before applying for a tax product:

26 Name Date of Birth Physical Address Tax Identification Number What is my responsibility? Client identity should be verified by the tax professional before proceeding with the transaction. Verification can be accomplished by viewing the following documentation: Unexpired government issued photo identification for each individual listed on the return (taxpayer and dependents) Verification of Tax ID Number, such as viewing the taxpayer s social security card Tax forms, such as W-2s and 1099 forms. Photocopies of the picture identification and SSNs should be made and kept as part of the taxpayer s file where allowable by law. Please check your state legislation to ensure you are allowed to maintain copies of client information. What do I do if I am suspicious of the identity of a client? If you are suspicious of the identity of the client, ask for additional verification such as utility bills, credit cards or personal references. You should also scrutinize income documentation such as W-2s and other subjective or non-verifiable data used on forms and schedules. If the tax return information looks suspicious, verify sources of income and validate data that looks questionable. You can also contact TPG and ask to speak with our risk department. If you suspect fraud, you should not file the return. Filing a return when you suspect fraud could result in your being inactivated from our program.