Identity theft and tax fraud are growing threats to U.S. taxpayers. A recent IRS publication noted a 91% increase in identity theft reported to the Federal Trade Commission (FTC) from the fourth quarter of 2020 to the first quarter of 2021. And in 2020, the FTC reported receiving nearly three times as many tax-related identity theft reports as they did in 2019.
Faced with this increasing threat, how can you arm your consumers with the tools they need to protect themselves against tax identity theft?
What Is Tax Identity Theft?
Tax-related identity theft happens when someone uses stolen personal information (typically a Social Security number) to file a fraudulent tax return in hopes of collecting a refund. This often happens early in the tax season, before the taxpayer has a chance to file their return. It can delay their tax refund for months, ultimately taking years to fully resolve.
Empower Your Consumers With Education
As they say, “knowing is half the battle”. Educating your consumers on how to protect their personal information during tax season will go a long way toward preventing tax fraud.
Make sure your people know to do the following:
Learn the signs of identity theft
Most people don’t realize they have become victims of tax-related identity theft until they are notified by the IRS of a potential issue with their return. Share the IRS’ guide to identity theft with your people so they can learn the signs that their identity may have been stolen.
Watch the mail for tax forms
While many tax forms are now sent electronically, some employers, financial institutions, and other organizations still send physical tax documents in the mail. Mail can easily be stolen if a mailbox isn’t secure. If consumers do not have lockable mailboxes, they should consider having tax documents sent to a P.O. box instead.
Use an IRS Identity Protection PIN when filing electronically
All taxpayers who can verify their identities are eligible for an Identity Protection PIN. Encourage consumers to get their PINs early in the season using the IRS’ Get an IP PIN tool. Once they have their PIN, no one can file a return under their name without it. On a similar note, consumers should always use strong, unique passwords to file taxes electronically, and use multi-factor authorization whenever possible.
File taxes early
Filing early lessens the chances of becoming a victim of tax-related identity theft. Once a return has been filed for a certain Social Security number, the IRS won’t allow additional returns to be filed for that number. Remind consumers to file both state and federal tax returns as soon as they receive all of the necessary tax documents — and well before the tax filing deadline (April 18 this year).
Hire a reputable tax preparer
Before hiring a tax preparer, consumers should check with the Better Business Bureau to ensure the preparer has a good reputation and there are no complaints filed against them. A general internet search can also provide a good overview of a tax preparer’s reputation.
Practice safe Social Security number habits
This is a rule all year long, but is especially important during tax season. Identity thieves still use the trash to hunt for personal information, so it’s important to shred documents containing Social Security numbers, birthdates, or other personal or financial information. In addition, Social Security cards should be stored in a secure location at home.
Know how to avoid phishing or smishing scams
Phishing and smishing scams rise significantly during tax season. Phishing is when a thief uses fraudulent emails or websites to impersonate the IRS and collect personal or financial information. Smishing is a similar scam, except thieves use text messages to steal information instead of email. It’s important to know that for initial contact, the IRS only uses the USPS. They will never use email, text, websites, or social media for this purpose. Consumers should never disclose personal information through any of these channels unless they have initiated the contact themselves and are sure of the recipient.
Monitor credit reports
Credit report monitoring is the number one way to detect identity fraud. All consumers are entitled to a free copy of their credit report from each of the major credit bureaus each year. You can make credit report monitoring easier for your consumers with credit and identity protection tools from Securus that help spot suspicious activity and signs of identity theft.
Empower Your People To Avoid Tax Identity Theft With Consumer Solutions From Securus
At Securus Partner Solutions, we make it easy for your organization to provide consumers with the identity theft protection needed to keep their personal data safe. Our consumer-facing identity and credit solutions and our credit education platform give your people tools to combat identity theft and significantly reduce their risk of tax fraud.
Learn about our available consumer solutions on our website, and contact us to discuss how Securus Partner Solutions can help your organization protect its people from tax identity theft.