Client package lost in mail

Client emailed me saying that the package I mailed to them via priority mail (with a tracking number) arrived opened with many of its contents (including full copy of tax return, efiling forms and several supporting documents) missing. What to do?

Offer to send another copy.

Of course. But am I responsible if she were to incur any identity theft issues? Should I offer to pay for identity protection for a period of time like Home Depot, Target, Equifax etc?

Of course. But am I responsible if she were to incur any identity theft issues? Should I offer to pay for identity protection for a period of time like Home Depot, Target, Equifax etc?

Who knows whether any identity theft actually happened? The SSNs should be masked on the return, but maybe the signature pages were not masked. Was the client supposed to paper mail the signature pages back to you?

It might help your case (that it is not your responsibility) if your normal delivery method is electronic, and the client specifically asked for paper instead. But even if not, did the client tell you that their mailbox was not a safe delivery location? Or, how do you know a household member didn't open the envelope? Did the USPS confirm the tracking and delivery (you should be sure to keep a copy of this, with timestamps).

But rather than debate these things with the client, I'd wait and see what they are asking for, if anything. Again, I would start small, by simply offering to re-send, and see how upset they are.

The SSNs are masked on their copy. But you are correct. They are displayed in full on the signature pages. And yes, I asked for them to be mailed back to me. I’ve tried emailing these things to them in the past. But they are elderly and cannot figure out how to open the encrypted link. I have all the tracking and delivery confirmations.

Priority mail comes with some insurance (it starts at $50, unless you pay for more). However, tampering with the US mail is a felony, isn't it? Seems like it should be reported to USPS for starters. USPS says it should be reported within 60 days. Now I know you are not worried about getting a refund of postage, and the contents don't have a retail value. I don't know what "investigations" the USPS might do (little to none?). But if there are ramifications (identity theft?), seems like this would be a good thing for your client if it was done, like filing a police report.

It is my understanding that either the sender or recipient can file the claim.
https://pe.usps.com/text/dmm300/609.htm

See page 11
https://www.irs.gov/pub/irs-pdf/p4557.pdf

Yes. Planning on calling USPS first thing. Just wondering if anyone has had this happen and how you might have handled it.

From that link above:

"Tax practitioners should report data losses or thefts immediately to the IRS so that appropriate precautions can be made to protect clients from fraudulent returns being filed in their name"

Has the 2018 return (and prior returns) already been filed? If so, that would seem to limit the potential for fraudulent returns to be filed for now, until next tax filing season. If you still don't have the signatures, I'd drive over there right away if at all possible to get them in person, and then efile the return.

Are they in one of the states where an IP PIN can be obtained on demand? If so, have them do that right away.

They live in MA. That doesn’t count right? And I haven’t filed 2018 yet. That’s what I was mailing to them. I will definitely get it filed right away. Thx. I should be able to get them a PIN number for future returns. This should qualify them.

Was the Ma.tax return also missing .If so you should probably contact them also.

Do you have any information in your engagement letter covering mailing of tax return and various options available to receive signatures back on 8879 ? You may already have some protection from this event .

No. Engagement letter doesn't mention that. I've never had this happen before. Mailed hundreds of tax returns this way.

It is true that not every USPS package, even Priority Mail, is delivered properly -- I know this first-hand. But this is not a case of mis-delivery, rather an envelope that was opened presumably AFTER delivery. (How would anyone know beforehand what was in the package?) I'm curious what documents were left in the envelope, since you say only some things were missing. There is still way too little information to even determine if a "theft" occurred.

What responsibility does the recipient have to ensure a secure mailbox? And given that IRS itself uses ordinary first class US Mail to send and receive confidential data, why would it be unreasonable for a tax preparer to do the same?

Where does the responsibility end? If your tax office is on a street where there is construction work, or lots of unsafe drivers and poor traffic enforcement, and the client suffers a delay or injury on the way to or from your office, is that your responsibility?

This isn't your fault, and if you overreact, then will the client look to you if this becomes a big mess?

As per below, report to USPS.

There is a form for reporting identity theft concerns to the IRS and probably MA also. I'd prepare those for the client.

Suggest to the client that they put security freezes on their credit reports. There are 4 - people forget about Innovis. Send them the links.

That's it. You're available if they have questions.

I would treat this as a theft of taxpayer data. I don't know your professional obligations given that the theft happened while in the mail system (which includes the mailbox). But if I was that recipient I would immediately file a police report, freeze credit records, and request an identity protection PIN from the IRS if you can do that in your state. The IRS site has info on this topic, I don't know if it gets into tampered mail:
https://www.irs.gov/individuals/data-th ... fessionals

This is a common mechanism for identity theft. Here in SF they've busted a few rings where the perp's house is packed to the gills with stolen mail of that type (tax & financial correspondence). One was caught in the act with his hand in our mailbox, is how I know.

Makbo, they look at return addresses. Many times I've seen torn open envelopes from banks & brokers on sidewalks in our neighborhood. Lots of buildings have exposed mailbox slots and these creeps walk around and clean out whatever they can get their hands on. Nextdoor has plenty of video and pix of them at work.

In addition to always mailing a masked tax return I also black out or mask the cleint SS# on the E file authorization forms that are signed and returned to me.
I also do to send any mail with a return label that indicates that I am an ACCOUNTANT.
My name and address only without CPA

The priority mail envelope is usually sealed pretty tight so I would report this to post office.

UPDATE: I filed a missing mail report with the post office this morning. They called me this afternoon to tell me they found the missing items and will be overnighting them to me. (Hopefully all of them.) Thank you everyone. I sure learned a lot and need to think about possible changes going forward.

Even if you recover all the documents you client still needs to take precautions. You have no way of knowing if some of the documents were photo copied by some creepy operator.

Priority mail comes with some insurance (it starts at $50, unless you pay for more). However, tampering with the US mail is a felony, isn't it? Seems like it should be reported to USPS for starters. USPS says it should be reported within 60 days. Now I know you are not worried about getting a refund of postage, and the contents don't have a retail value. I don't know what "investigations" the USPS might do (little to none?). But if there are ramifications (identity theft?), seems like this would be a good thing for your client if it was done, like filing a police report.

It is my understanding that either the sender or recipient can file the claim.
https://pe.usps.com/text/dmm300/609.htm

Repoting the problem to the post office is a good idea, but you might let your client know you are going to do this first. You should also indicate to your client that the post office may investigate this matter.

I had a similar problem. It turned out my client's package was opened by someone in their household. Initially, there was some back and forth with the client, in which the client first claimed the package had not been delivered (in spite of USPS delivery confirmation) and then claimed they found the package, but with contents missing, I mentioned that mail tampering was a felony and I would report the problem to USPS. Then the client's story started to change, Basically, they told me "never mind". A family member had received the package and "mistakenly" removed items. . I don't know at what point the client discovered the problem was on their end. And I am not saying that mail isn't sometimes lost or damaged in transit, but your client might not thank you if it turns out the problem is on their end and USPS opens an investigation.