Tax Day is Around the Corner
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 email@example.com.
- 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 education information.
1Tax Time Survey conducted by Impulse Research Group on behalf of Experian, March 2011