Tax Fraud

Tax season has officially begun. But you may not be the only one anticipating your tax return. Identity thieves are also anticipating obtaining your personal/sensitive information and/or receiving your tax return. Tax fraud occurs when your identity is assumed by someone other than you and through the knowledge of your personal/sensitive information is able to file your taxes and ultimately, receive your tax return.

How can I possibly be a victim of tax fraud?

You may wonder how could tax fraud be possible if your personal/sensitive information was never compromised. This is true to your knowledge but not necessarily the reality. With the heightened use of information technology, more services being made available online, and information being transmitted and stored electronically, the chances of sensitive data being stolen has increased. As a result, your personal/sensitive information may already be on the dark web, but you have not been a victim of any transactions occurring related to your identity being stolen. Many victims learn that their identity was stolen when they file their tax return, only to be rejected or receive a notice from the IRS, because it has already been filed using their SSN.

Tips on what you can do to prevent becoming a victim

Protect your sensitive information, SSN and W2 – This is a practice that you should always follow. You should never travel with your social security card. Never disclose sensitive information to anyone you do not trust or expect to ask, especially via email or an unsuspecting phone call. Safeguard your sensitive information as you would any other important documents.

  • Secure your W2: During tax season, these same precautions should be taken to secure your W2. Whether you are downloading or expecting to receive your W2 in the mail, you should take precaution to protect your sensitive information. If viewing or downloading your W2, avoid using a public computer and rather use a computer that you deem secure. When viewing your W2, beware of your surroundings and avoid being a victim of shoulder surfing – someone looking over your shoulder to view your computer screen to obtain your sensitive information. If you download your W2, be sure to not keep it stored on your computer, especially unencrypted (able to be viewed by anyone) and transfer it to a safe location, such as an encrypted USB or external hard drive that will be kept in a secure physical location.
  • Secure your printed tax forms: When printing completed tax forms for your records, you should keep them in a secure physical location. However, once they are no longer needed, for example the timeframe expected to have those records for auditing purposes, the forms should not be simply thrown in the trash, but rather shredded, ideally with a cross-cut shredder to prevent dumpster diving – someone gaining access to your sensitive documents you disposed of and being able to still read the information.

Beware of phishing scams – This social engineering technique is used by an identity thief to manipulate you to provide your sensitive information. The phishing scam may involve an email or call seeming to be from someone or a business requesting your sensitive information or W2. The email or call may appear to be from a legitimate source, such as a tax preparer, your job or even the IRS. There have been incidents this tax season of people receiving calls from IRS impostors, intimidating them to divulge sensitive information. It was reported that the IRS impostors seem to be legitimate because they contact you not only at home but also at your job.

The IRS doesn’t initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS does not call taxpayers with threats of lawsuits or arrests. - (IRS, 2017) Learn more about phishing, how to spot a phishing email, what to do if you suspect a phishing email or took the bait

Research tax preparers, tax software and online tax service providers – When choosing a tax preparer, be sure to do your research to prevent identity theft and ensure that your taxes are being filed correctly. Similarly, research the tax software and online tax service providers to ensure reliability and security features are being used.

Use safe computer and online practices – If you choose to file taxes online, prior to doing so, you should at the least: use a computer that you deem safe (not a public computer), use secure wifi that is password protected (not public or free wifi), scan and rid the system of malware, apply all updates for your computer’s operating system and software installed, and utilize a strong password for your login to the tax software. When filing taxes online, ensure that your connection is secure in order to safely transmit your sensitive data. If the connection is secure, the URL should begin with https instead of http. Your browser may also show a padlock indicating that the site is secure and using security controls to transmit sensitive data.

File taxes early – Although following secure practices will assist in minimizing your chances of tax fraud, we can never fully eliminate this risk or guarantee we will not become a victim. As a result, it is also encouraged to file your taxes as early as you can before the identity thieves beat you to it.

What to do if you are a victim

If you are a victim of identity theft, the IRS provides the following steps:

  • File a complaint with the FTC at identitytheft.gov.
  • Contact one of the three major credit bureaus to place a ‘fraud alert’ on your credit records:
  • Contact your financial institutions, and close any financial or credit accounts opened without your permission or tampered with by identity thieves.

If your SSN is compromised and you know or suspect you are a victim of tax-related identity theft, the IRS recommends these additional steps:

  • Respond immediately to any IRS notice; call the number provided.
  • Complete IRS Form 14039, Identity Theft Affidavit, if your e-filed return rejects because of a duplicate filing under your SSN or you are instructed to do so. Use a fillable form at IRS.gov, print, then attach the form to your return and mail according to instructions.
- (IRS, 2017)

If you have questions or concerns regarding staying safe, you can also use your resource at FIU by contacting the Information Security Office.

Have a safe tax filing season!

References:

IRS (2017). Identity Protection: Prevention, Detection and Victim Assistance. Retrieved from https://www.irs.gov/identity-theft-fraud-scams/identity-protection

IRS (2017). Taxpayer Guide to Identity Theft. Retrieved from https://www.irs.gov/newsroom/taxpayer-guide-to-identity-theft