Posted Online: Feb. 09, 2013, 5:10 pm
Biz Bits: The most common identity theft risks at tax time
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Tax time is always tough. Whether you will owe or anticipate a refund, plan to do your own taxes or pay a professional to do them for you, preparing and filing your taxes can be a tedious task.
It also can be a risky one: the information needed to prepare your taxes is a treasure trove for enterprising identity thieves.
The nonprofit Identity Theft Resource Center notes that for identity thieves, "tax time is a prime time of opportunity." Forms such as W-2s and IRS tax forms usually include your Social Security number, name and address, and often, financial account information, the ITRC notes.
Using that information, identity thieves can access your existing financial accounts, open new lines of credit and commit other acts of fraud.
It's important to keep identity protection front-of-mind during tax preparation season. Take steps to protect yourself against these six common identity theft risks during tax time:
- Stolen tax documents:Your tax forms contain a wealth of personal information. Important documents such as W-2s and interest statements begin to arrive in the mail in January. Theft of these forms could be disastrous.
If you don't already have one, consider investing in a locking mailbox or renting a secure post office box. Avoid leaving incoming mail sitting in your mailbox for any length of time, and always take outgoing mail directly to your local post office branch.
- Unsecured documents:Once you've retrieved these documents from the mailbox, don't let security lag. Never leave sensitive documents lying around in plain sight in your vehicle, home or workplace. Keep documents in a locked safe or file cabinet.
- Phishing scams: Identity thieves often prey on tax-time anxiety by sending emails or making phone calls that purport to be from the IRS or other federal agency. These tactics are designed to bilk you out of sensitive information. It's simple to avoid these scams: ignore all such communications.
The IRS uses good old-fashioned snail mail - never email, text messages or phone calls - to communicate with tax payers. If you suspect you're being scammed by someone posing as an IRS representative, report the incident to the IRS by forwarding suspicious emails to firstname.lastname@example.org.
- Sloppy CPA: You hire a tax preparer to help ensure you get the maximum return or minimum payment, and that you don't run afoul of complex tax laws. Yet your tax preparer can cause you problems if he or she fails to properly safeguard your documents.
Be cautious when hiring a tax preparer. Only work with someone you know or whose reputation you've investigated. Ask who will have access to your documents and how your preparer will keep your forms and information secure.
- Slipshod storage: Everyone knows you have to hold on to tax documents. In most cases, you should keep tax returns and supporting documents for at least three years from the date of filing. Keep forms in a secure, locked location - or store them digitally in password-protected files. When it's time to dispose of documents, shred them with a cross-cut shredder before getting rid of them.
- Failing to monitor your identity: Keeping an eye on your credit and financial accounts is the single most proactive step you can take to protect your identity at tax time - and throughout the year. Check your credit report before and after tax season, and several times throughout the year. Consider enrolling in a comprehensive identity theft detection, protection and resolution product as well.
Better Business Bureau Watch
In the past few months some retailers and banks have started offering consumers the option of e-receipts. This paperless option helps reduce clutter and waste, but the Better Business Bureau reminds shoppers to be aware of identity theft while using this new technology.
These e-receipts offer new opportunities for stores and consumers. For many stores the e-receipts are tied to the store card or the clerk can quickly enter your email address at the end of the purchase. It is a way for the store to save money and offer another option for the customer.
E-receipts also offer an easier way for consumers to keep track of, and file away, receipts to help with a return or exchange at a later date. They also help cut down on waste and clutter.
"Although the convenience of e-receipts may be seen as a benefit, it is important to make sure that companies do not use e-receipts as a way to fill up your inbox with junk mail," according to Steve J. Bernas, president and CEO of the Better Business Bureau serving Chicago and Northern Illinois. "Confirm that the company does not sell your email address or use it for financial gains."
For shoppers who are interested in opting for e-receipts, BBB offers the following tips:
- Ask if you can opt out of receiving promotional emails. Now that the business has your email address, it's possible you'll start to receive coupons, newsletters and other promotional emails from them ... and even from others if they've sold or shared your data. You may want to set up a separate email address to use for paperless receipts so that you can easily monitor it for spam.
- Beware of scams. Having receipts emailed can also make you susceptible to phishing and other identity theft scams. Scammers pose as retailers or banks with realistic-looking emails that may claim there are problems with your purchase and request that you click a link to fix it.
The link may take you to a fraudulent site that asks for your personal information, or it might download malware on your computer that will search your hard drive for account numbers and passwords.
- Make sure your anti-virus software is up to date.
For more tips, visit bbb.org.
According to Forbes.com, here are the top companies to work for in the U.S.:
1. Quicken Loans
2. The Container Store
3. Anadarko Petroleum Corporation
4. Park Place Dealerships
5. EOG Resources Inc.
The new BlackBerry was revealed Jan. 30, but according to reports by The Associated Press, the upgraded smartphone won't be available in the U.S. until March.
GateHouse News Service