Tips for Avoiding and Navigating Tax Identity Theft
It’s tax season again and on top of doing your personal and business taxes, the last thing you need is to worry about tax identity theft. Unfortunately, a phishing scam has been reported just in time for the 2017 tax season. Learn how to protect yourself from tax identity theft scams and how to find out if your identity has been compromised.
The W-2 Phishing Scam
This year isn’t the first instance of the W-2 phishing scam. Referred to as the “CEO spear phishing effort” in last month’s blog, this scam is used by fraudsters to impersonate high-level employees in order to trick payroll and human resource employees into giving them information found on W-2’s, such as name, address, and social security number. With this information, the scammers file fraudulent income tax returns on behalf of the taxpayer and receive thousands of dollars in tax refunds. In some cases, they have been so bold as to send a follow-up email shortly thereafter, before the initial scam is discovered. In the second email, the “CEO” requests that funds be wire transferred to a certain bank to cover payroll or other bills.
As reported by Verizon’s 2016 Data Breach Investigation Report, it isn’t uncommon for people to fall victim to phishing scams. In fact, 30% of phishing emails are opened and about 12% of targets go on to click the link or attachment (source).
Medicaid, Medicare, Social, and Other Card Identity Theft
In addition to phishing scams, another way of gaining sensitive personal information is through medicaid cards and other personal identification cards., Health insurers once used social security numbers as the patient file number and it was not uncommon for driver’s licenses to include it. Both of these practices have either been discontinued or outlawed but old records are still out there. In addition, Medicare cards still contain them and CMS (Centers for Medicare and Medicaid Services) will not begin issuing new cards using randomly generated identifiers until the end of 2019. Medicare beneficiaries, particularly older Americans, are advised to carry their cards with them in case of an emergency, which puts them especially at risk. Learn more about minimizing this risk with these tips from the Equifax blog.
Signs Your Identity Has Been Compromised
Although preventing identity theft should be the goal, it’s easy to check whether your identity is being used without your knowledge. Some signs that your identity has been compromised during tax season include:
- More than one tax return for you has been filed
- IRS records indicate you have received more wages than you actually earned
- Your state or federal benefits were reduced or canceled because the agency received a report of an income change.
- The IRS tells you your refund check has already been cashed.
Protecting Your Identity During Tax Season
During tax season, it’s important to be especially diligent in protecting your identity. One way to protect yourself from tax identity theft is to file your taxes as early as possible, minimizing the “window of opportunity” for identity thieves. If you file electronically, make sure the computer you’re using has a robust firewall and that your spyware and anti-virus software is up to date. If you send your returns by mail, send them during regular business hours and never leave them (or any other important documents) in a mailbox over night. Mail thieves “fish” documents out using something long, like a coat hanger, with something sticky on the end. It’s worth the extra cost to send your returns by certified mail with a return receipt, especially if you are enclosing payment. In the unfortunate event that your returns are not received by the IRS, the receipts should help in getting the late penalties waived (something I can attest to).
Unless you need it for an official use (e.g. filling out an I-9, obtaining a passport, etc.) do not carry your social security card, or anything with your social security number on it, on your person. If for some reason you think you’ll need the number, follow the tips suggested for your medicare card, above.
Popular IRS Scams to Be Aware Of
There are two IRS scams happening where fraudulent individuals attempt to gain your information by impersonating the IRS. Here are the popular IRS scams to be aware of.
IRS Email Scams: Be aware that the IRS NEVER contacts taxpayers requesting personal or financial information by email. If you do receive something questionable, they ask that you forward the email to firstname.lastname@example.org.
IRS Phone Call Scams: Phone calls from someone pretending to be an IRS agent is another popular scam. The caller may claim that they need your financial information in order to process your refund. Conversely, they may threaten to arrest or to place liens against property if you don’t pay them. The elderly are frequent targets of this scam. Keep in mind, the IRS will not contact you by phone to demand immediate payment, request your sensitive information, or ask for a credit card over the phone. If you believe that you may be a victim of an IRS phone scam, hang up immediately. Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484 to report a potential scam. Learn more at irs.gov.
Shred Sensitive Documents to Protect Your Identity
Don’t keep old tax records longer than necessary. Also, do NOT set them out with the recycling. For the most secure process, your sensitive documents should be shred–preferably by a data destruction professional like Vangel. Whether you choose off-site or on-site shredding, we use a commercial shredder which cuts documents into random sizes and widths. Additionally, your shredded documents are mixed with others’, making it virtually impossible to piece anything back together. Unlike many shredding companies, Vangel processes your paper from beginning to end, offering a complete chain of custody.
Leave It to The Professionals
When your identity is at stake, or any sensitive information for that matter, home shredding is not recommended. If a “dumpster diver” sees shredded paper, it’s an indication that it contains confidential or proprietary information. Most home shredders are strip-cut and if it’s at the curb in front of your house, chances are it contains your information only, making it easier to reassemble.
Also, shredded paper is not welcome in curbside recycling programs. According to the Institute of Scrap Recycling Industries’ recently published “Curbside Recycling Guidelines & Specifications V.1 Final,” shredded paper is “not preferred or may be prohibited.” Why? Because the shreds wrap around the equipment and must be cleaned off periodically, causing downtime. In addition, they adhere to the other recyclables, contaminating them. Just as the paper mill doesn’t want glass shards in its’ recyclable paper, neither does the aluminum recycler want paper sticking to the cans.
Tax season is often a “taxing” time of year but if you follow these guidelines it should be less stressful. Many community organizations and businesses hold “Community Shred Days” at this time of year, requesting a small donation in return for peace of mind. View Vangel’s upcoming community shred days which are open to the public. If you can’t make one of these events, call us at (410) 644-2600 to find out when we’re open to the public.