In the last year several
clients have run into the problem of identity theft. In particular one taxpayer
simply filed their ordinary form 1040 with IRS as they have done for more than
25 years. The return claimed a refund. The IRS wrote to the taxpayer and advised
that a return had already been filed and a refund issued to the same tax
number. That’s how it starts at least with regard to tax filings. It was not
simply a matter of the taxpayer revealing their true identity which got them
eventually the return of their tax refund. So it is best to take steps to avoid
identity theft. The IRS has suggested that individuals file their tax returns
as early as possible to avoid hackers and thieves who attempt to file early in
the tax season using stolen tax information. A recent client who is a musician
told me that many of the vendors of her work require her Social Security
number. The more a taxpayer gives out that number to numerous vendors the more
likely identity theft can occur. My suggestion was to use an employer
identification number for all of these business receipts. The EIN can be
acquired by a sole proprietor who can use it for any number of businesses and
there is no need to incorporate. The IRS website provides guidance for the use
of EIN numbers. Recently IRS declared a national tax security awareness week
which ended on December 1, 2017 in Revenue Bulletin 2017 – 193 issued November
27, 2017, IRS listed seven steps to help with online safety and protecting tax
returns and refunds in 2018. These include the following
Shop at online retailers you
know.. Sites using the S designation in HTTPS of the URL are secure; look for
the lock icon in the browser’s URL bar
Avoid unprotected Wi-Fi.
Unprotected public Wi-Fi may allow thieves to view transactions
Learn to recognize and avoid
phishing emails. These emails often suggest a password is expiring or that an
account needs to be updated. Phony contact from the IRS is now too common.
Use security software to
protect against malware that may steal data and viruses make sure firewalls and
browser defenses are always active and updated
Use passwords that are
strong, long and unique. Experts say a minimum of 10 characters but longer is
better. Use a combination of letters numbers and special characters
Use multifactor
authentication which means users may need a security code usually sent as a
text to a mobile phone in addition to usernames and passwords
Encrypt and password protect
sensitive data if keeping financial records tax returns or any personally
identifiable information on computers. This data should be encrypted and
protected by a strong password.
IRS also suggests getting a
free credit report from each of the three major credit bureaus once a year and
creating a “My Social Security account” online with the Social Security
Administration where a taxpayer can see how much income is attributed to their
Social Security number which will help determine if someone else is using the number.
