Approximately one in four people in the United States will be a victim of identity theft, the fastest growing crime in America. Documents prepared at tax time contain highly sensitive and confidential information about a person or a business. Safeguarding this information appropriately can help reduce the risk of identity theft. As tax season approaches, there are actions you can take to help keep your personal information safe and protect yourself against identity crime.
Conduct research before selecting a tax preparer. You can leverage information from the Better Business Bureau to see if the individual tax preparer or company has a questionable history. A tax preparer has access to your highly sensitive information, and you should feel comfortable with the way that person or company handles the information. Do not choose a tax preparer or company that shares or sells information with a third party. For additional tips on how to choose a tax preparer, access information provided by the Internal Revenue Service (IRS) (http://www.irs.gov).
Be especially cautious with W-2 and 1099 forms because they contain social security numbers. Do not carry important tax information in your purse/briefcase or leave it unattended in a car.
Shred all paperwork used to prepare and calculate taxes such as receipts, bank records, credit card statements, and various other documents when they are no longer needed. Identity thieves can obtain personal information by retrieving it out of the trash and dumpsters.
NOTE: Some information does need to be retained for audit purposes. Consult the IRS Web site or a tax professional for rules regarding what information and records need to be retained and for how long.
Take proper precautions when preparing and storing tax documents on a computer by protecting them with encryption and/or passwords. If tax returns are filed over the Internet, make sure to have updated firewall, antivirus, and anti-spyware software to prevent computer invasion.
If tax returns are sent through the mail, send them certified mail with a return receipt for safety and documentation purposes. If returns are sent via regular mail, always put them in a secured mailbox or take them to the post office. Do not put them your returns in the mailboxes with the flag up, which can alert potential thieves. Make sure that tax documents and checks (if included) are not visible through the envelope.
Request to have refund checks directly deposited into your bank account, regardless of how a tax return is filed. This can help avoid the risk of the check being lost in the mail or stolen from a mailbox. In addition, direct deposit usually provides access to refunds sooner.
Identity criminals have become more sophisticated and have developed scams related to tax refunds posing as the IRS. Here are some tips to help prevent consumers from becoming victims:
The IRS never initiates taxpayer communications through e-mail. You should not provide bank account information or social security numbers for refunds via e-mail. Be suspicious about receiving e-mail from the IRS and being asked to click on a link to a Web site to enter personal information. Even though the Web site may look legitimate and professional, the IRS does not conduct business by e-mail. All IRS Web page addresses begin with http://www.irs.gov/.
For more information on tax-related scams, or if you suspect a scam related to taxes and/or the IRS, please visit “How to Protect Yourself from Suspicious E-Mails or Phishing Schemes” at the IRS Web site. You can also forward suspicious e-mail to the Federal Trade Commission at firstname.lastname@example.org or contact the Commission at www.consumer.gov/idtheft or 1-877-IDTHEFT (438-4338).
Additional information on identity theft prevention and recovery is also available on this Web site http://www.idsafety.org.