Fraud prevention checklist to protect tax identity
Tax identity theft is a multi-million-dollar business. In 2016, the IRS identified more than 1 million fraudulent returns and paid more than $320 million in fraudulent refunds.Unfortunately, it’s a relatively easy crime to commit. All the information a criminal typically needs to file a fraudulent tax return is a person’s name, date of birth and Social Security number. They also need a way to file an electronic return.
There is no fool-proof way to stop identity theft. The good news is that there are signs the partnership between the IRS and the tax industry to combat tax fraud is working to reduce the number of new reports of identity theft. But there is more to do, and it also takes vigilance and action on the part of consumers.
To protect their own tax identities, taxpayers can review this checklist with some simple ways they can protect their information, beware of scams and be vigilant with their taxes.
Protect personal information
- Do not carry a Social Security card in a wallet.
- Do not give out a Social Security Number (SSN) on the phone or in a public place.
- Do not send a SSN or date of birth in an email or a text.
- Do not share an online user ID, password or PIN with others. Do not leave this information anywhere someone else can easily see or gain access to it.
- Avoid easily guessed or common names and numbers for passwords and PINs. Change passwords regularly and don’t use the same password for multiple accounts.
- Close unused credit-card accounts and destroy the credit card.
- Use a shredder for documents containing personal information.
- Use firewalls, anti-spam/virus software, update security patches.
- Look for the S in https which means the site uses secure encryption technology.
- Do not shop online on public Wi-Fi where information can be intercepted.
- Request a copy of a credit report and keep tabs on who might be accessing it.
- Review financial statements like credit card bills and bank statements for suspicious activity.
Beware of Scams
- Be aware of phishing and social engineering scams. Be suspicious of emails that ask for credentials. Do not provide personal information over the phone, via text, through the mail or on the Internet.
- The IRS will never email or connect on social media to request personal information.
- The IRS will never call to demand immediate payment.
- The IRS will never ask for credit or debit card information over the phone.
- The IRS will never require specific payment methods.
- The IRS will always contact taxpayers by mail first about taxes owed.
- Report phone calls, emails or letters from IRS impersonators to the Treasury Department. Use its IRS Impersonation Scam Reporting Portal or call 800-366-4484.
Be Vigilant with Taxes
- File early to lessen the window of opportunity for a criminal to file first.
- If using a tax preparer, ask what they do to protect tax return information.
- Victims of identity theft may apply for additional IRS protections like the identity protection PIN.
- Consider a product like the Tax Identity Shield.
Taxpayers can help better protect themselves by practicing these simple measures. But these measures alone won’t always be enough. Criminals can get the information they need to file a return from company and government data breaches. Data breaches are at an all-time high. In 2017, more than 174 million records were breached – with most including name, date of birth and Social Security number. In addition, recent breach trends include wage information, which allows crooks to get past some of the IRS’s more advanced theft filters.
If the worst happens, the Tax Identity Shield® offers victims assistance restoring their identities and getting their refunds. Tax Identity Shield® also proactively protects its users by monitoring their tax identity, including scanning the black market internet, or dark web, sites for the taxpayer’s information, notifying clients if someone uses their information to e-file using H&R Block, providing a credit score and credit report and completing a tax identity theft risk assessment in January each year. Additionally, if a taxpayer does become a victim of tax identity theft, H&R Block agents will guide them through the restoration process.
Taxpayers can learn more about tax identity theft and how to spot it and what to do if they become a victim.