Protecting Yourself Against
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. As the ID Theft Center puts it, “the tax man cometh and the scammers follow.”
It’s important to be especially diligent in protecting your identity at this time of year. 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, 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 personally attest to).
Phishing Scams Enabling Tax Identity Theft
The W-2 Phishing Scam
It’s back again. Referred to as the “CEO spear phishing effort” in last year’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.
The Tax Professional Phishing Email
Beginning last summer when most of us were using our tax refunds to enjoy our vacations, scammers started targeting tax professionals. Using the subject line “Software Support Update,” fraudsters trick tax professionals into providing their log-in credentials. Once logged in, the scammers have access to client information, including social security numbers and bank account information which they can then use to commit identity theft, access bank accounts and file phony tax returns to obtain fraudulent refunds.
Another scam begins with an email to the tax professional appearing to be a potential client looking for help in filing their return. If the professional responds, a second email is sent with an embedded address or attachment. When the link is clicked or the file downloaded, the hackers have access to the computer and the clients’ personal information.
How could anyone in such a targeted industry fall for these scams? Hackers are very good at replicating the appearance of legitimate companies and it’s easy to miss the subtle distinctions: a missing period in an email address, a “dot net” as opposed to a “dot com” extension for a website. If there is indeed an update, don’t click on the link but log out and download the update directly from the site. In addition, scammers often find their victims by accessing other victims’ computers. They then contact the professional by appearing to be a referral from an existing client, business associate or friend.
If you are a tax professional, visit Protect Your Clients, Protect Yourself at IRS.gov for additional information.
Scams Using the IRS
Do you remember when the IRS instructed taxpayers to write out “Internal Revenue Service” in the “pay to the order of” check line? With a few pen strokes, scammers were changing “IRS” to “MRS,” filling in their name (or a name for which they had identification), and cashing the check!
IRS scams are now more sophisticated. Fraudulent individuals attempt to gain your information by impersonating the IRS. The two most prevalent are email and phone call scams. For information on these scams, visit last year’s blog “Tips for Avoiding and Navigating Tax Identity Theft”. Remember, the IRS will never:
- Call to demand immediate payment.
- Demand payment without allowing you to question or appeal the amount you owe.
- Require payment in a certain way. There are many payment options.
- Ask for your credit or debit card number over the phone.
- Threaten to bring local police or other agencies to arrest you.
- Threaten you with a lawsuit.
If you receive a questionable email, the IRS asks that you forward the email to email@example.com then delete it and block the sender. If you believe that you may be a victim of an IRS phone scam, hang up immediately and contact the Treasury Inspector General for Tax Administration (TIGTA) to report the call. Use their “IRS Impersonation Scam Reporting” web page or call 800-366-4484. Learn more at irs.gov.
Shred Sensitive Documents to Protect Against Tax Identity Theft
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 Professional
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. Also, shredded paper is now prohibited in most curbside recycling programs. 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. With China’s prohibition on the import of post-consumer mixed paper – paper that has been collected in residential curbside and commercial recycling programs – recycling programs are strengthening the enforcement of their rules and leaving contamination behind. You don’t want your bags of shredded paper left at the curb all day.
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.