Identity theft has become a huge problem for the IRS. Last year alone, there were nearly 650,000 cases of Identity Theft reported to the IRS. Some believe the skyrocketing amount of cases are a direct result that the IRS now requires all tax returns to be filed electronically. The IRS has implemented “digital safeguards” this year to intercept returns which they deem have a high probability of identity theft, and have deployed a task force of 3,000 agents who’s job it is to investigate Identity Theft. Unfortunately, many taxpayers who are legitimate “early filers” are bound to get caught up in the web of “digital safeguards” and have their much-needed refunds delayed. And while the Task Force the IRS has deployed to investigate cases is good, it’s effectiveness is limited to after identities are already stolen are returns are filed fraudulently; no real relief to the victims. While this influx of electronic data has clearly exposed the IRS safeguards of personal & private electronic data to be lacking, the are certain steps that the taxpayer can take to help secure their sensitive information:
- Avoid sending or receiving W2’s, 1099’s or any other personal tax documentation to or from anyone by e-mail. Encryption offers some defense, but there are still safer ways to communicate your tax data. REMEMBER: A single W2 or 1099 contains your name, address, social security number/EIN; all the info that any would be thief needs to file a fraudulent return. An email server can be anywhere in the world and could be susceptible to attack. Furthermore, the email accounts of the sender and receiver are susceptible to hackers as well especially since it has been shown that password security for the average user is sorely lacking. The best alternatives are to a) send everything by mail or b) fax your documentation (however many fax services are increasingly turning to “E-Fax” technology whereby faxes are converted to emails…thats why option a) is still the most secure.)
- Do not carry your social security card with you, or supply your SS# to anyone over the phone/internet without confirming who they are and why they need it. This appears to be a “no brainer”, but many taxpayers carry their Social Security numbers in their wallets/bags along with their driver’s licenses and IDs. Again, a lost wallet gives everything a thief needs to steal identities. Beware of online & phone scams as well asking for your SS#’s. The IRS will NEVER request sensitive private information over the web/phone unsolicited.
- Maintain physical safe-guards to protect your private data. This is as simple as a locking file drawer or cabinet.
- Maintain digital safe-guards. Sometimes it is impossible to keep all your private information only in paper format. If you keep data on your computer it is important to have in place: a) strong passwords which are changed frequently b) a firewall; never plug a wire directly into your computer from a your broadband modem c) anti-virus software.
- Verify your credit report. This should be done once every 12-18 months. Anything out of the ordinary like a steep drop in your rating is a good indicator that your identity may have been compromised.
- Optional: Obtain Identity Theft Protection. If you have ever been a victim of identity theft, buying protection is recommended; who knows who still has your information out there? If you relay or store a lot of personal data via the web, protection may be a good idea as well. There are many affordable services that would be well worth the cost if you become a victim of Identity Theft just once.
While there is no “magic bullet” to prevent Identity Theft entirely, following the general rules above will limit your exposure. If you’d like more information on how to safeguard yourself and your family from Identity Theft–or have any tax related inquiries–feel free to contact and R&G Brenner professional here, or call us toll free (888) APRIL-15.