The saying goes that you cannot avoid death and taxes. And, unfortunately, with taxes, you get a slew of identity theft. Don't let yourself become a victim. Take these steps to help fight back against identity theft.
How Serious is the Problem?
Unfortunately, tax time identity theft is a serious problem, and you cannot just ignore it.
It is so serious, that resourceful criminals were able to hack the IRS itself in 2015, and steal the records of approximately 330,000 taxpayers.
And identity thieves already started 2016 off with a bang. First, there was a reported breach at popular tax software prover TaxSlayer. And this week there was an attempt to get e-file information on over 400,000 taxpayers from the IRS.
The problem has grown so serous that the government now estimates the Internal Revenue Service lost $5.3 billion to identity fraud in 2013 - and that number is growing.
And while the IRS claims it is beefing up its internal systems to reduce tax fraud and identity theft, you will need to take some matters into your own hands.
What Can I Do to Stop Identity Theft?
Identity thieves are employing both high tech and low tech methods to steal your information and file a false return on your behalf. They then claim a refund, make sure the funds are delivered to them, and vanish. Meanwhile, you are left with the burden to clean up the mess.
To protect your identity, we alway recommend you start with our list of Tips to Keep Your Personal Information Secure. These tips include precautions you can take both online and offline.
But there are some additional tips we recommend at tax time:
Know Your Tax Preparer
If you use a tax preparer, ask abut their data protection systems. It turns out that old-school stand allows tax preparers and accounting firms are data rich targets for hackers. So make sure they are using up to date and secure systems to protect your data.
Watch out for Phishers
This time of year, you will be bombarded with fake emails abut your taxes. Some will come to claim to be from the IRS. Others from popular tax preparation firms and software providers. Do not click on the links in these emails. Instead, visit the sites directly from your browser.
One more tip: if the IRS wants to contact you, it will be over the phone or by snail mail. Not email.
Adjust Your Withholding to Minimize Your Refund Amount
This is actually good advice on a number of levels. Make sure your withholding is set up correctly. This will minimize the amount that goes to the IRS with each paycheck. And it will also minimize your refund. So if fraudsters do steal your ID, the hold up on your refund will not be as serious.
Get an IP PIN
The IRS is currently offering a pilot program in Florida, Georgia and Washington, DC, offering filers a Identity Protection PIN (or Personal Identification Number). This PIN, normally available just to those what may have been the victim of past tax fraud, requires that your return include the PIN to file their return.
And it was these PINS that ID thieves were after when they hacked the IRS earlier this year.
If you are interested in learning more about IP PINS, click here.
What If I am a Victim Already?
If you already are a victim of tax time identify theft, you need to contact the IRS immediately. The IRS has published a guide to the steps you should take. Click here for that guide. The steps include filing IRS Form 14039, which should allow you to get your own IP PIN.
I also advise acting fast. Your claim may take as long as 120 days to be resolved. And maybe longer, if your case is especially complex.
You may also want to contact the Federal Trade Commission. They offer general services to help victims of identity theft. And, of course, you will want to contact the big three credit score providers, Experian, Transunion and Equifax.
If you are interested in learning more about identity theft protection services, please check out this guide that we offer.