Four Ways to Prevent Tax-Related Identity Theft

Published: March 9, 2018 by Michael Bruemmer

While identity theft and fraud affect millions of Americans each year, the threat especially pervasive during tax season. In fact, tax fraud was the second most common type of identity theft reported by consumers in 2017. When you consider how much highly sensitive information you share with your employer, tax preparer, and the IRS, it’s no surprise tax season is a prime opportunity for criminals to steal your identity.

Tax-related cyberattacks and scams can be sophisticated and take many forms, but during tax season people must practice extra vigilance when viewing emails, answering phone calls or receiving advice on tax issues.

Criminals take advantage of tax season by filling out tax returns using stolen information, like names and social security numbers, to collect refunds. They can also use your information to gain employment, which means you could face taxes for an income you didn’t earn. With the majority of people filing their taxes online (online submissions made up 92 percent of all 2017 returns), criminals also use fake IRS and accounting emails and websites to convince taxpayers to reveal personal information.

Many consumers may be unaware they are leaving themselves vulnerable to this kind of identity theft. To protect yourself, here are four things you should not forget to do this tax season:

  1. Shred Sensitive Documents: Identity thieves aren’t above going through garbage to find personal identifying information such as tax returns, bank statements, credit card bills or solicitations. The simple act of shredding these items makes it significantly more difficult for thieves to access your data. Don’t have access to a shredder? Many counties offer free shredding services for residents during tax season and throughout the year.
  2. Stay Informed of Major Data Breaches: It’s nearly impossible to escape the steady stream of news reports about high-profile data breaches. However, the impacts of these attacks don’t end once they make the headlines. Some criminals will wait months or years before using stolen personal data. If you think your personal information may have been compromised, placing a fraud alert on your credit file is a simple way to add a layer of protection by requiring businesses to take extra care when issuing credit in your name. We offer more information on how to enact a free, 90-day fraud alert as a free service here.
  3. Beware of Phishing Scams: Cybercriminals use phishing schemes to lure unsuspecting victims into revealing their personal and financial information, usually through unsolicited emails. Remember, the IRS will never request personal information through an unsolicited email or phone call. To help detect phishing emails, review this regularly-updated list from the IRS of common scams that taxpayers may encounter. Another common threat to be aware of are W-2 scams, which have increased nearly 80 percent from 2016 to 2017. These scams involve cybercriminals hacking into executives’ email accounts and requesting staff W-2 forms from human resources or payroll departments. When it comes to tax-related communications, every person and organization must stay alert and report anything suspicious as soon as possible.
  4. Protect Your Personal Computers: Equip your devices with the latest firewalls and anti-virus software programs before filling or submitting your taxes online. Additionally, you should take advantage of software updates, refrain from saving passwords and personal information to your online accounts, and avoid using public Wi-Fi to send any tax-related information.

Tax season induces enough stress without the added headaches associated with identity theft. While these four tips can help you prevent tax-related identify theft, it’s impossible to completely eliminate your risk. It’s important to stay aware and cautious throughout the tax process. For more information on preventive measures you can take or what to do if you think you may have been a victim of identity theft, check out our blog on possible signs of fraud at tax time.