Keep Identity Thieves at Bay during the 2008 Tax Season

The following is a guest post from Brian Lapidus, chief operating officer of Kroll’s Fraud Solutions.

The U.S. economy may not be the only beneficiary of the recently passed federal economic stimulus package – identity thieves are getting a boost, too. Why?  In the wake of the recent IRS announcement that more than 130 million Americans will receive tax rebates this year, identity thieves are using the promise of extra cash to lure Americans into disclosing their sensitive personal information. 

These “phishing” schemes can take a variety of forms, the most common of which involves an identity thief who calls or e-mails a consumer pretending to be an IRS employee.  The consumer is promised a sizable rebate if they file their taxes early.  All the caller needs in exchange is the consumer’s bank account number to deposit the check. 

The bad news is that schemes like the one described above are common; the good news is that falling victim to one is avoidable – as long as consumers get smart on the facts and follow the proper precautions.

Preparing Your Taxes

• Beware of phishing schemes.  The IRS never contacts consumers by e-mail or phone to request sensitive personal information (SSN, checking account information, etc.).  If you receive a phone call or e-mail that you suspect may be a “phishing” scam, file a complaint with the Anti-Phishing Working Group and contact the IRS immediately.

• Avoid shopping mall kiosks or pop-up preparers who offer to assist you with tax preparation.   Considering the amount of sensitive personal information involved in the tax preparation process, you probably don’t want to hand over your files to someone whose experience and background are unfamiliar to you.  Ask a trusted friend to introduce you to his/her tax preparer or consult a local CPA association for trustworthy members.

Filing Electronically

• Avoid using wireless networks.  Use of wireless networks means your data is being transmitted over open airwaves, similar to a radio transmission. If not properly secured, data can easily be picked up by an uninvited party.

• Don't prepare your taxes on a public computer.  Public computers can contain “keylogger” spyware, which records every keystroke including passwords and account information.  Keyloggers make it possible for an identity thief to steal any information entered into the computer during your session.  Preparing your taxes on a public computer also increases your vulnerability to “shoulder surfers” – individuals who look over your shoulder to observe what you are doing and, more importantly, collect the sensitive data you’re entering. 

• Only keep a record of your tax claims as long as necessary.  Thieves can't steal what you don't have. Purge the data once the need for it has expired. Suggested guidelines for individual recordkeeping are available online through the IRS.

Filing by Mail 

• Don't put your completed claim in an unlocked mailbox for pick-up.  Instead, deposit outgoing mail at a post office. 

• Take it one step further and opt for delivery tracking.  That way you can be certain that your information has gotten to the IRS safely.

• Waiting for your tax rebate? Promptly remove mail from your mailbox after delivery.  The longer your mail sits in an unsecured mailbox, the greater your chances of it falling into the wrong hands. 

• You may also choose to have the IRS deposit your tax rebate directly into your bank account, further minimizing the risk of theft.