Taxes and Identity Theft Risk – What you need to know to protect yourself during this vulnerable time

The trust we put in software, coupled with our fears of getting in trouble with the IRS has become the perfect storm for those who wish to steal your identity. What follows are some tips for protecting yourself in this electronic world.

Protect yourself:

  • Use security software, firewalls, and anti-virus software.
  • Use strong passwords. Microsoft recommends using passwords that:
    • Are at least 8 characters long
    • Do not contain your name, username, or company name
    • Does not contain a complete word
    • Is significantly different from prior passwords
    • Contains uppercase letters, lowercase letters, numbers, and symbols (ex: %, ^, ?)
  • Do not click on links or download attachments from unknown sources
  • Do not send emails or other electronic correspondence with account numbers, social security numbers, or other personal information.

Know how the IRS communicates:

The IRS, as well as state taxing authorities, will never initiate contact with you you by phone, email, social media, text messages, or other electronic means.  The IRS will only initiate such contact in writing via good old fashioned snail mail.  Should you receive suspicious contact from someone claiming to be an IRS agent, do not give them any personal information.  In some circumstances, you may need to report these suspicious events to the IRS.  The IRS has a Report Phishing and Online Scams site aimed at guiding you to proper action.  Be familiar with the proper procedure and follow it when issues arise.

If the IRS receives a return that they believe to be suspicious, they will send you a letter requesting that you verify certain information in the return prior to processing any refunds.  Your tax professional can assist you with this process.

Know the signs that your identity has been stolen:

The IRS has outlined that if any of the following occur your identity may have been stolen:

  • You attempt to electronically file your return, and it is rejected because a return has already been filed using your, your spouse’s, and/or your dependents’ social security number(s).
  • You owe additional tax, or have collection actions taken against you in a year you did not file a return.  This is common for dependents.
  • The IRS has records for wages or other income from an employer for whom you did not work.

If you suspect that your identity has been stolen, the IRS has extensive procedures that you should follow.  You should also contact your tax professional who will be able to assist you to navigate this process.