Credit Fraud and Identity Theft Protection During Tax Season

If you received an email or phone call from the Internal Revenue Service (IRS) telling you that your tax return was selected for an audit, would you provide your personal information? If you answered yes, chances are you would become a victim of credit fraud and identity theft.

Each year, millions of Americans spend hours preparing their taxes, hoping they do not owe money to Uncle Sam. But what many fail to realize is that the government is not the only one after their money—identity thieves take advantage of tax season to prey on unsuspecting victims.

Tax Time Scams to Steal Your Identity

Some of the biggest tax time scams are “phishing” schemes, designed to steal personal and financial information from victims via the Internet. Last year, the Treasury Inspector General for Tax Administration identified at least 20 fake Web sites pretending to be the official IRS Web site. According to the IRS, dozens of scams are reported each tax season.

In one common scam, an official-looking email informs you that you need to provide additional information for your tax return to be processed. The email directs you to a Web site that looks exactly like the IRS Web site. You are then told to fill out an online questionnaire, which asks for your Social Security and bank account numbers. One problem: while the graphics and pages look authentic, the site is a fake.

In 2006, even the commissioner of the New York State Department of Taxation and Finance was targeted by a phishing e-mail. Commissioner Andrew Eristoff says he received a fraudulent, tax-related email on his government computer. “It’s a reflection of how brazen these crooks have become,” says. “Here they are targeting a tax administrator with a tax refund scam.”

While phishing scams are increasingly popular due to the increased use of e-filing, many thieves use more traditional methods of stealing information, such as dumpster diving and stealing company records. Linda Foley, co-executive director of the Identity Theft Resource Center, understands all too well the danger of tax forms falling into the wrong hands. “A few years ago an employer used personal information taken directly from my tax forms to open credit cards and a cell phone account in my name,” says Foley.

Identity Theft: Top Complaint

Foley is one of more than 15 million identity theft victims in the United States. For seven years in a row, identity theft has been at the top of the list of complaints reported to the Federal Trade Commission (FTC), accounting for 36% of the 674,000 complaints the FTC received last year. Victims of identity theft suffer from a wide range of consequences, including:

  • having scammers open up credit accounts using their names
  • finding out that someone has been employed using their Social Security numbers
  • being turned down for insurance and loans due to damaged credit
  • being arrested for crimes they did not commit

In many cases, all a thief needs to steal your identity is your name and Social Security number. Therefore, tax documents are goldmines for identity thieves, as they contain valuable information, including your name, address, account information, and Social Security number.

Keep Your Identity Safe During Tax Season

To help prevent credit fraud and identity theft, we encourages you to exercise caution when handling tax-related documents and information. The following tips can help reduce your risk of credit fraud and identity theft during the tax season:

  • Always keep your tax paperwork in a safe and secure location. Shred any paperwork you no longer need before you dispose of it.
  • If you are filing your taxes online, be sure to use updated firewall, antivirus, and spyware software.
  • Monitor your mail closely during tax season. Make a list of everyone who pays you, including employers, banks and brokerages, and make sure you receive copies of what they send to the IRS.
  • Choose your tax professionals as carefully as you would a doctor or lawyer. Remember that a tax preparer has access to your Social Security Number, address, and other private information.
  • Be aware of IRS-related scams. If you receive an email asking for your personal or financial information, delete it or send it to the FTC at spam@uce.gov for investigation. The IRS will never email taxpayers about issues related to their accounts or ask for your Social Security number or financial details over the phone. If you have any doubt whether a contact from the IRS is authentic, call 1-800-829-1040 to confirm it.

It may seem like scammers are everywhere during tax time. However, if you exercise precaution when dealing with tax documents, you can help protect your identity.

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