With tax day fast approaching there are some considerations for businesses and
consumers regarding identity theft risks.
Businesses have a great deal to lose when it comes to their financial identity.
Not only can they face problems with creditors and vendors, but they can find themselves
unable to fill orders and conduct business normally if their credit is tarnished.
Tax time is a prime season for consumer identity theft with sensitive personal
and financial information transmitted via mail and email in mass quantities. Scammers
are on the lookout for easy targets.
A recent survey conducted by Impulse Research Group on behalf of Experian showed
that almost half of the respondents filed their own taxes electronically, another
20% file taxes by mail and 30% file taxes with the help of a tax professional leaving
an enormous amount of room for information to be redirected without the knowledge
of the individual.1
Cases of identity theft related to stolen tax returns have surged 300% according to Scripps Howard
News Service investigation. An identity thief only needs one W2 or 1040EZ form to
gather enough information to open a new credit card, rent an apartment and even file
a fraudulent tax return in someone else's name. These complex instances of identity
theft can take a toll on one’s credit and finances, making it important to educate
your consumers and employees about taking a proactive stance to protect their privacy
this tax season.
The survey also noted that 48% of the respondents store their tax documents in
an unsecure place leaving them susceptible to being viewed by others and potentially
putting them at risk for identity theft. 1 Businesses can also take heed
from this warning by ensuring their tax documents are secure and proper destruction
of documents takes place once the period of limitations for a return runs out.
Experian® Data Breach Resolution makes the following recommendations
for tax-time information security:
Protect your business from phishing scams by properly educating your staff on the handling
of documents that contain Tax ID numbers and sensitive employee data. Also, never
respond to unsolicited requests for business or personal data.
Ensure that proper destruction of documents takes place once the information is
no longer within the period of limitations for the tax return it was related to. Request
to be taken off of solicitation lists for business loans and credit and be sure to
shred these documents as well.
Use electronic payment forms rather than paper forms whenever you can. Electronic
banking and transaction networks use passwords and encrypted messages making this
form much more secure.
Call the Internal Revenue Services' (IRS) Identity Protection Specialized Unit
at 1 800 908 4490 if you cannot file your tax return because one has already been
filed in your name. You should also file a police report.
Remember that the IRS won't contact you over the phone or via email to obtain
personal information or discuss your tax return. Avoid these phishing scams and report
them to firstname.lastname@example.org.
Don't work with a tax preparer who asks you to sign a blank tax return or for
a percentage of your tax refund. Ensure your preparer can be reached after tax day
in case you have any questions or tax problems.
If you use your smartphone for tax or other financial purposes, be sure to password
protect your phone and applications, if possible. Also consider using software or
phone features that allow you to remotely wipe all information from your phone if
it's lost or stolen.
For information about other topics such as credit cards, credit reporting, credit
scoring, and fraud and identity theft, visit Experian's online credit
1Tax Time Survey conducted by Impulse Research Group
on behalf of Experian, March 2011