Tax Season Theft & Fraud

Tax season seems to be one of the most stressful times of the year. Not only is there a lot of paperwork to prepare, but now we have the added fears of fraud and identity theft. This year, we’ve already seen a significant increase in fraudulent filings, and tax identity theft is one of the most difficult to detect. Usually, the only way you know a crime has been committed is when you attempt to file a legitimate tax return. Instead of receiving anticipated refunds, though, you receive a notice that a return has already been filed under your Social Security number.

In 2014, 34% of calls to the Identity Theft Resource Center involved government identity theft. This is a very specific type of identity theft, as it can encompass any scenario involving using someone’s information to gain government services, benefits, or filings. This type of crime can be anything related to government-overseen services, such as filing a fraudulent tax return with a stolen Social Security number, trying to get a job using someone else’s information, applying for any kind of government issued benefits, and more.

Like most forms of identity theft, you usually have no immediate way of knowing it occurred, giving the thieves a quiet head start. But unlike financial identity theft in which you receive a suspicious-looking account statement within a month or two, government identity theft can remain undiscovered until such time as you file for benefits or file your tax return, and you only learn about it months or even years after your data was stolen.

There are a few steps that consumers can take to reduce the risk of tax identity theft. The first step in limiting any kind of identity theft is always to safeguard your information as much as you can, while the next step is to be on the lookout for any unusual activity. Your Social Security statement, any medical statements or benefits reports, and even your annual W-2s can show you that someone is using your information for fraudulent purposes, but you have to stay on top of it in order to be aware. Report any strange activity immediately by contacting the Social Security office, the IRS’s fraud investigation department, or other pertinent government agencies.

Next, file your tax return as early as possible. Now is the time to begin gathering your necessary paperwork and filing documents so that you can submit your return as soon as possible, beating a thief to the punch. If you wait until the filing deadline and then discover that another claim has been filed under your Social Security Number, it becomes your burden to prove that the scammer is not, in fact, you. Not only is this a major problem to deal with, but if you count on the refund as part of your income, the delay will affect your ability to pay bills and routine expenses.

If you suspect that someone has fraudulently filed a return using your information, you can contact the IRS directly to report the crime by filling out Form 14039, Identity Theft Affidavit. You can also contact the IRS’s Identity Protection Specialized Unit for assistance.

15 tips to reduce your risk of ID theft

By Mark Pribish
Vice President and ID Theft Practice Leader

Whether you are a consumer or a small-business owner planning for a great 2015, help yourself by taking charge of your cybersecurity and personal privacy to reduce your risk of becoming an ID-theft victim.

Don't let the near-constant data breach news lull you into "breach fatigue" and therefore be unprepared when ID theft hits you or your business.

To help you reduce your exposure to and the impact of ID theft, here are "Mark's 15 Most Important ID-Theft Need-to-Knows":

Cybersecurity:

• Small businesses that ignore the big threat of a data breach are a bigger target for ID-theft criminals.
• Businesses need to understand that a data breach is inevitable. Your business profits, brand, and reputation depend on your data-breach response plan.
• You cannot stop identity theft and data breaches. Defend yourself or your business by increasing ID-theft awareness, ongoing education and taking actions to further protect yourself.
• Create a data-breach response plan to safeguard your business against the insider threat by conducting pre-employment background screening, regularly testing your business and information-security access controls and regularly reviewing your data-retention policy.
• Cyberinsurance may be a good option to help your business minimize today's cyber-risks. Work with your insurance broker to determine your cyber-risks and the best coverage for your organization.

 Personal privacy:

• Ignorance is not bliss when it comes to privacy settings and social media sites.
• Be more vigilant and hands-on with your personal-privacy settings and be aware that most apps lack basic security defenses and create some sort of a privacy issue.
• Stop ignoring terms and conditions. Read, understand and use privacy settings and be diligent about your social networking. Beware of fake accounts, unless you want to be a partner in your own identity theft.
• Protect your vehicle documents as if they were cash and regularly check for unusual activities after purchasing a vehicle or after it's been in the possession of others.
• You need to read and understand the privacy policies of every organization you have a relationship with to know how your information is protected, saved, analyzed, sold and/or disclosed.

Identity theft:

• Assume you will be an ID-theft victim, even as you do more to protect yourself and are vigilant with all of your personal information.
• Synthetic-identity theft and fraud is an emerging threat as well. Check your credit-bureau report quarterly at no cost through annualcreditreport.com.
• When you swipe your credit or debit card, there is always a risk of giving ID-theft criminals what they need to steal your money through what is known as "skimming" – when criminals install electronic devices at locations at which we use cards, such as an ATM, a grocery store or a gas pump.
• While no password is "unbreakable," don't make it easy for ID-theft criminals by using weak passwords, or the same passwords.
• The best defense against phishing is to be aware that it happens every day. Assume you're being "phished" until you verify the source of an unexpected e-mail or call.

Mark's most important: ID-theft criminals are ramping up for 2015. Make sure you know what you need to know to reduce your risk of ID theft.