Tax Return Identity Theft is Still a Problem: How to Prevent Tax Fraud

Tax filing season is behind us, and you may have noticed that electronically filing your tax return this year required you to jump through a few more hoops. The IRS has taken measures to curb the rise of tax filing identity theft, but it is still a major problem. Here are some of the changes made during this filing season:

• Passwords for e-filing accounts now require a minimum of 8 digits and include certain special characters;

• Signing into an online account now requires you to answer three security questions;

• Online software providers are now required to implement new lockout procedures to limit the amount of time in your account and the number of login attempts;

• Many software providers are requiring customers to verify their email addresses;

• Most states are requiring that you provide your driver’s license number before filing a state return.

Though these measures cause greater inconvenience for taxpayers, the IRS believes they are necessary to keep consumers from becoming the victims of tax fraud.

To protect yourself from having your identity stolen, you need to be vigilant throughout the year, not just during tax filing season. Thieves are always out there trying to steal your personal information, and they tend to be even more aggressive during the off-season, when consumers tend to let their guard down.

Here are some things you can do to reduce the chances of having your identity stolen:

Be Skeptical of Phone Calls and Emails

There are two things every taxpayer should know about phone calls and email. First of all, the IRS NEVER initiates contact with a taxpayer via the phone or email. The first form of communication from the IRS is always by regular mail. If anyone calls you claiming to be from the IRS and asking for personal information, ask them for their name, badge number and call back number. Then report them immediately by calling 1-800-366-4484. Along these same lines, do not share personal information (such as Social Security numbers, bank accounts, etc.) with anyone else you do not know that contacts you over the phone for any other reason.

If you receive an email claiming to be from the IRS, do NOT:

• Reply

• Open any attachments

• Click on any links

Instead, forward the email to phishing@irs.gov then delete the email.

Shred Documents with Personal Data

Many identity thieves collect the data for potential victims by dumpster diving. This is why every consumer should have a paper shredder. When it comes time to discard paperwork with personal information on it, always run it through a shredder rather than tossing it out in the garbage.

Protect Electronic Data

Information stored on your computer is also a common target for identity thieves. Be sure to keep this information protected with a firewall and anti-virus program. Unfortunately, not all firewalls and anti-virus programs are created equal. Many of the free programs are more than a week or two behind in keeping up with all the viruses out there. This makes them a far less secure option. Shop around and invest $50 or so a year on a quality anti-virus program so your electronic data can stay protected.

Carefully Select your Tax Filing Partner

With the security of your eFiling more vulnerable than ever before, it is essential to work with a professional who understands the importance of keeping your data as secure as possible. While some online software programs work well, there is no substitute for working directly with a local accounting firm. Carefully weigh your options in this area and select the right partner to ensure your chances of becoming the victim of tax fraud are minimized.