Protect Yourself From Tax Fraud

  • Fraud Prevention

Ready or not, Tax Day is quickly approaching. With the advancements in the online tax preparation technology and software, many people who wouldnt dare attempt to file their own tax returns even just 5 years ago, can easily do so in the comforts of their own living room. For the average person, gone are the days of making an appointment with a tax advisor and spending a Saturday afternoon filing taxes. With the online tax preparation, someone can file their taxes at their own leisure and the software walks you through exactly what to do, and even tells you if it thinks you've made a mistakenot only do you now have the convenience, but you also have the confidence in knowing your taxes (at least should be) are filed mistake free. However, there are inherent risks that come along with this convenience.

Tax returns are the crme de la crme for identity thieves.Not only do online tax forms contain your personal and financial information, they also contain your spouses information and your dependents information.Dont get me wrong, online tax preparation is greatit makes filing a breeze and makes reviewing previous years tax returns nothing more than a few clicks of the mouse. However, you typically only have a username (most likely an email address) and probably an 8-12 character alpha-numeric password protecting documents which my grandparents use to put in a lockbox at their bank.

Earlier this month, USA Today published an article that states in 2012 there were just shy of 450,000 victims whose stolen SSNs were used by thieves to collect unwarranted refunds; that number rose more than 80% over 2011.In a similar story, just yesterday (Wednesday, Feb 27, 2013) authorities arrested six people in Los Angeles, CA that used nearly 2,000 stolen identities to file nearly 3,000 false tax returns and they obtained more than $19 million in unwarranted tax refunds.

Until the time in which the online tax preparation companies start utilizing such products as EVS IdentiFraud Consumer + KBA to verify and authenticate the individual attempting to log-in is indeed who they claim to be, we, as consumers, must do our own due-diligence to ensure our information is protected when filing taxes online. Check out this article and inforgraphic from Mashable that mentions some ways to keep yourself safe and reduce the risk of becoming the next victim of identity theft.

[Contributed by Eric Knapp, VP of Client Services]