Easy Ways You and Your Business Can Avoid Tax Return Identity Theft

Even though the tax return deadline has been moved to July 15, 2020, due to the COVID-19 crisis, it’s a good time to talk about easy ways you can protect your identity and, if you’re a business owner, the identity of your employees as everyone prepares their taxes.

Just like many cybersecurity scams, hackers are after one thing—money. When it comes to taxes, they want to get their hands on your tax-return dollars. 

Here are some tax return identity theft prevention tips for you as an individual:

• Protect your Social Security number. Each year, thousands of SSNs are compromised by identity thieves, so it is vital to do everything you can to safeguard them. This includes keeping your physical Social Security card in a safe, secure place, preferably a lock box. Never carry your Social Security card in your wallet. And be careful who you share your SSN with. Yes, your bank or employer may need it, but you shouldn’t need it for everyday purchases or provide it to anyone over the phone. Finally, shred any documents that may contain your SSN on them.
• Keep your passwords on lockdown. If you’re completing your taxes online, don’t allow your computer to automatically save the password to your account. Same goes for passwords to accounts at financial institutions of any kind. You can use a password manager, though, like LastPass.
• Shred credit card solicitations. Another piece of junk mail? Not exactly. These credit card solicitation mailers can be an easy first step for a hacker to gain access to your SSN by opening a card in your name. Be sure to shred them before tossing in the garbage. TurboTax recommends calling 1-888-5-OPTOUT to get your name taken off the pre-approved credit card offers list.
• Use a locked mailbox. If your mailbox is not secured with a lock or key code of some kind, it is vital that you take steps to mitigate this. A locked mailbox prevents criminals from viewing or stealing your mail, particularly mail that may contain private information that could lead to identity theft. 
• Know the warning signs of identity theft. If you’re unable to e-file your tax return because one was already filed under your SSN, this is a red flag that someone has fraudulently filed in your name. Other warning signs could be if you receive a tax notice that does not match what you submitted. 

Here are some tips for businesses to help reduce the chance of identity theft:

• Ensure data security measures are in place across employee workstations. Make sure you have the basics covered, from antivirus and anti-malware software installed on all devices to network firewall protections to multi-factor authentication and file encryption.
• Implement a data security plan. This is where a company like BARR can step in to serve as a third-party cybersecurity consultant, auditing your data security compliance against standard controls through something called a SOC (System and Organization Controls) report. Learn more about your options here.
• Educate your employees. Many data breaches are the result of an employee sharing data, particularly SSNs, not realizing the information is going into the wrong hands. Here is a helpful taxpayer guide to identity theft as a starting point.

Remember, the IRS never initiates contact with taxpayers by email, text, or social media requesting sensitive information. The IRS also does not make calls threatening tax-related lawsuits or arrests—these are scams, too.

To learn how BARR can strengthen your company’s data security, contact us for a free consultation.