Taxes and Identity Theft
With tax season underway, we want to remind everyone to be vigilant regarding tax-related identity theft. Last year, it was a nationwide problem of individuals filing their taxes only to realize that someone had already used their Social Security Number to file a fraudulent return and claim a refund. The IRS has stepped up efforts to combat this issue. Below are some recommended actions to prevent tax-related identity theft:
- Keep your computer secure by using firewalls, virus protection and file encryption for sensitive financial data
- Use strong passwords (those containing upper and lower case letters, numbers and allowed symbols), particularly for financial websites
- Protect you personal information by not carrying your social security card or other documents containing your SSN. Keep old tax returns and tax records secure or encrypted if stored electronically.
- Monitor bank and credit card statements regularly by checking your credit report at least annually; and signing up for an identity theft monitoring service.
One of the best defenses to a fraudulent tax return with your SSN is to file your taxes as early as possible. Also, as the IRS steps up reviews on suspicious returns there may be more of a delay in refund processing than in the past. If you’ve been the victim of tax return fraud in the past, you were probably asked to file a police report and put a freeze on your credit. You may have been issued an Identity Protection PIN to use in future tax filings, which will provide further protection. Your tax preparer can also be a resource to help through the process if someone files a fraudulent return. In our experience, CPAs have been invaluable resources when these issues have arisen. As long as technology is able to keep ahead of law enforcement, we don’t see it going away anytime soon.