Protect yourself from fraud this tax season

Tips on how to keep your data secure

March 2010

Tax season can open the door to different types of fraud—from thieves trying to cash in on other people’s tax returns, to those using someone else’s personal information to gain employment. As with most identity-related crime, protection against tax-related fraud is a matter of protecting your sensitive personal data—things like your name, address and Social Security number. Here, also, are some special considerations to keep in mind whether you’re e-filing or filing on paper.

 

If you’re e-filing: 

Be sure to take steps to protect your computer. This means using strong user names and passwords when conducting online financial transactions. It means using strong anti-virus software and keeping all updates current. If you’re doing taxes on your computer, make sure you’re storing sensitive data on a secure external hard drive or disk. Likewise, avoid disposing of or donating any equipment—including computers—that contains old tax information.

Once you have a secure set-up, you’ll also need to be aware of some of the “social engineering” scams identity thieves have been known to deploy. A common one involves an e-mail purported to come from the IRS. If you get one of these, consider it phony—the IRS never communicates via e-mail—and forward it to phishing@irs.gov. Another thing to watch out for is e-mail and banner ads. Don’t follow links purporting to help you with your tax matters.

Unfortunately, impostor eFile Web sites are on the rise. These sites can appear to be legitimate and cause serious complications if you wind up feeding them sensitive data that can be used to commit fraud. Be sure to always go directly to your tax preparer’s Web site.

If you’re filing on paper:

If you’re filing on paper with the help of a tax preparer, it’s important to choose your tax preparer wisely. Fraud rings fronting as tax preparation companies may steal personal information, redirect your return, or offer to fraudulently review your returns for inaccuracies. You can research your preparer with the Better Business Bureau and IRS Office of Professional Responsibility, which can verify the status of their license. Also be wary of telephone calls related to your taxes, as telephone tax scams have also been reported in the past.

Remember, paid preparers are required to sign your return and complete all preparer sections requesting their ID number. You should never sign a blank or incomplete return.

All Taxpayers:

When it’s time to mail out your tax returns, make sure you do so via certified mail from a United States Postal Service office. To avoid the possibility of lost or stolen refund checks, opt for direct deposit of tax returns. And again—protect your personal data. Store all tax-related documents, including your pay stubs, W-2s and tax returns, in a secured location such as a safe deposit box or immobile safe. Check with your employer to see what kinds of data protection measures they have in place as well.

About three months before your birthday, you’ll typically receive an annual Social Security Statement with a record of your taxable earnings. This document will identify all individuals working in the United States under your Social Security number. Be sure to review this to ensure that person is you, and that the information recorded is correct.

Don’t wait until the last minute to file your return. For more information, see:

The IRS’s “Tips for Choosing a Tax Preparer”

IRS Fact Sheet: “How to Choose a Tax Preparer and Avoid Preparer Fraud” (pdf)