Safeguarding Your Identity from Tax Fraud

Identity theft.  These can be two of the scariest words in the English language.  Identity theft can be a nightmare in its simplest form and can literally ruin a life in extreme circumstances. Although identity theft is something that everyone should be concerned about and monitor all year long, many people only begin to give it a thought when tax season comes around.

Every year more and more people take advantage of filing their tax return online. Online software makes it a quick and affordable way to plow through the endless information needed to either get the refund you were hoping for or find out how much you owe. Unfortunately, while you were gathering your information and typing it into your TurboTax or other online account, someone may have already filed for you.

The Internal Revenue Service (IRS) has become so concerned about fraudulent tax returns this year that it is delaying refunds for millions. According to the IRS, about 40 million families will have to wait until after February 15 to begin receiving refunds as the agency ramps up its efforts to battle tax fraud through identity theft.

According to a Fox News report identity thieves received $3.1 billion tax refunds that were issued through fraudulent tax returns in 2014. In 2013 the payout was a whopping $5.8 billion. The IRS says that it stopped almost $47 billion in additional fraudulent returns from being issued in that two year time period.

Although the majority of tax fraud through identity theft is done from outside sources, Timothy Camus, Deputy Inspector General for Investigations admitted that in some cases, IRS employees have used their positions to commit fraud. In one case, an IRS employee stole tax information on hundreds of people and used the information to apply for fraudulent refunds which totaled between $550,000 and $1.5 million.

In an effort to make more Americans aware of the dangers of identity theft during the tax return season, the Federal Trade Commission (FTC) is promoting Tax Identity Theft Week which takes place January 30 through February 3, 2017.  During Tax Identity Theft Week, the IRS, FTC and the National Association of Tax Professionals are offering free webinars to educate people about ways that thieves can steal their identity. Every day during the week a different topic will be discussed to help consumers protect themselves and reduce their chance of being victimized.

While the webinars will offer greater detail about how identity theft happens, it is important to understand how simple it is for a thief to steal your information. Here are the top ways you can protect yourself from falling victim.

1. Don’t Share Your Social Security Number. The most valuable piece of information that a thief can have is another person’s Social Security Number.  Never share this information in an email or over the phone. It is especially important to safeguard this information from solicitors who may be trying to scam you. Understand that no government agency will call you or email you for this information. If you receive a request over the phone or via an email, you can bet that it is a phishing scam and you should report it to the police immediately.
2. Don’t Overshare on Social Media. Many people are overly open on their social media pages and don’t elect to set any privacy controls. Sharing too much information makes it easy for identity thieves to piece together enough information about your life where they can easily steal your identity. Keep your private information private and set those privacy controls.
3. Shred, Shred, Shred. So many people make the mistake of disposing of sensitive information in a trash can instead of shredding the documents. Bank statements, pay stubs, insurance papers and tax forms all contain private information that can help identity thieves target you. Shred these papers. A simple shredder costs less than $20 these days and can save you a lot of trouble and a lot of expense.
4. Avoid Wi-Fi Hotspots. Wi-Fi hotspots can be set up by virtually anyone anywhere. Tapping into one of these unsecured hotspots can allow a thief to steal your data as easily as if you handed them your phone or computer with your passwords. Try to only use private and trusted connections especially when using credit cards or sharing sensitive information.

In his book, The Business Immunity System, Sentinel Background Checks CEO Rachid Zahidi also tackles the complexities of how identity theft happens. Zahidi covers many of the same preventative measures mentioned above but he also delves a bit deeper, explaining that thieves can easily steal W-2’s from mailboxes. Zahidi suggests having a secured post office box for sensitive tax documents and financial documents to be mailed.

In 2016 Zahidi spoke with Judy Wang on CLTV News in Chicago and shared his tips to prevent becoming a victim of Income tax-related ID theft. In the segment he goes into greater detail on ways to protect yourself. You can watch the interview in entirety on the company website sbchecks.com by going to the YouTube icon and clicking on the interview or by clicking here.

Rachid Zahidi is president and CEO of Sentinel Background Checks and has enjoyed a long career spanning multiple industries, including international business, risk management, background checks, and anti-money laundering investigations. For more information on the services offered by SB Checks, please call (888) 725-2535 or visit sbchecks.com.