Even though the focus right now is on the holidays, it won’t be long before tax time rolls around and digital tax fraud becomes rampant. Read how to become more aware and more diligent for protecting your information.
According to the IRS, a Security Summit with public and private tax administration leaders met to discuss ways to combat the rapid rise in digital tax-related identity theft. Led by IRS Commissioner John Koskinen, the group reached an agreement on a series of recommendations to protect taxpayers including authentication, strategic threat assessment and response, and an information-sharing work group.
Getting the IRS and tax leaders more involved in fighting back against digital tax fraud is only the first step. Taxpayers also need to diligently protect themselves from becoming victims. Here are some ways to protect yourself from digital tax fraud before it occurs.
Watch out for Scams
Stop digital tax fraud before it escalates by looking for red flags and scams. The U.S. Homeland Security Department warns the public about fake tax preparers. Such impersonators use multiple ways of tricking taxpayers into handing over their personal info and refunds, so be wary of anything suspicious. Some key examples are preparers who base their fee on a percentage of the refund and tax professionals who don’t ask for receipts or ask questions about your eligibility for deductions.
Preempt fraud by checking your free credit report every year through Equifax, Experian and Trans Union to monitor any suspicious activity. You can also sign up with a service like LifeLock to monitor your credit activity and flag any suspicious activity before it escalates. Whatever service you use should also be able to help recover funds and educate on tax fraud prevention.
Use a Secure Network
It’s tempting to feel a false sense of security that your Internet connection is safe. But just because you’re using a firewall on your device or have never before experienced issues doesn’t mean there isn’t a way for cyber criminals to get in. Change your WiFi password regularly and never check your financial information or other sensitive info on a network you don’t know. Cyber criminals can easily crack into free public WiFi and poorly secured networks and steal your information.
Protect Personal Information
Electronically filing tax refunds has been the mainstream norm for years, but this method also opens up opportunity for cyber criminals to steal personal information. These criminals thrive on finding your Social Security number and other personal information such as your date of birth.
Hide personal information on your social media profiles and regularly change all passwords to banking and financial sites. Provide your Social Security number only when necessary and don’t automatically hand it over because a business asks for it. It’s also wise to shred previous returns you no longer need or to back up returns on a secure, encrypted server. Check with your Tax advisor for how long to keep your tax returns. Generally the guideline has been seven years, however there are exceptions for different situations.
Stay in Touch with the IRS
Official-looking yet phony emails, phone calls and mail from the IRS often lure people into handing over a windfall of sensitive information. Never respond to an IRS email, and if you receive a letter, immediately call to confirm if it’s legitimate.
Keep in touch with the IRS by calling only official numbers listed on your tax returns or IRS website. Inform the IRS of suspicious activity. If you receive a call from the IRS but are uncertain that it’s from their office, hang up and call them back before handing over any requested information.
We are living in a truly high tech world where almost anything is possible – for the “good guys” as well as the “bad guys”.
As consumers our job is to maintain vigilant caution in all areas for protecting ourselves our families and our identity.