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Identity Theft – Prevention Tips

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Identity Theft Prevention Tips - Delaware CPA FirmEvery time we turn on the news lately or pick up a newspaper we hear of another company being hacked and private customer information being compromised. In the last year hackers have hit banks, department and grocery stores, restaurants, and even healthcare providers.  It seems that no one is safe.  In recent weeks we learned that the IRS also suffered a security breach involving its “Get Transcript” application as well. Taxpayers often use this application to obtain previously filed tax returns in order to obtain mortgages or student financial aid.  According to the IRS, the hackers used previously obtained knowledge to clear several layers of authentication to obtain such information about the taxpayers.

Today’s identity thieves are not just opening credit card accounts or taking out loans on your behalf; they are filing fraudulent tax returns as well.  This is referred to as tax-related identity theft. Thieves use acquired data and false information to file a tax return claiming a refund before the taxpayer files their actual return.  The IRS’s system then rejects the legitimate return filed by the taxpayer stating that a return had already been filed. According to the Associated Press, the U.S. Treasury paid out over $5.8 billion in fraudulent tax refunds in 2013 to identity thieves.  As the problem worsens, protecting your identity is becoming more and more important.

If you were affected by one the many data breaches, the IRS offers an option to help prevent a fake return from being filed on your behalf.  Form 14039 Identity Theft Affidavit is a two-page document that alerts the IRS of a potential problem.  The form requires the taxpayer to attach additional proof of who they are.  In response, the IRS will mail the taxpayer a 6-digit pin number that must be used to file future tax returns.

Form 14039 is just a tool to combat tax-related identity theft; it will not protect you from other types of identity theft. Protecting you and your family will require a little bit of work and adopting good habits. Here are some tips and resources to limit your risk of becoming a victim:

  • Get on the “Do Not Call List”.
  • Stop the pre-approved, unsolicited Credit Card and insurance offers that come by mail. To opt out, call 1-888-567-8688.
  • Do not carry your Social Security Card in your wallet. Keep it at home in a fireproof box with other important documents such as your passport.
  • Check your credit report at least annually. No credit card is required. Each of the three credit bureaus must give you a free report once a year so you can request a report from a different bureau on a four-month rotation.
  • Annually check your child’s credit history. Child identity theft can go undetected for years and could affect them getting credit or a job in the future. TransUnion offers a “Child Identity Theft Inquiry.”
  • Review your Social Security Administration earnings statement annually.
  • Never use public Wi-Fi to do banking or other financial transactions.
  • Protect all computers with a firewall and anti-virus protection.
  • Use passwords with random characters for all financial websites and change them regularly. This may require storing passwords in a notebook that is kept in a secure location such as a fireproof box.
  • Whenever possible, use a username that is different from your email address. In addition, create an email address that is only used for financial matters to limit spam.
  • Use care in posting information on social media sites. Can the answers to your security questions be found on LinkedIn or Facebook?
  • Never give out personal information on the phone unless you initiated the call and you are sure about the person you are talking to.
  • Shred all unneeded receipts and pre-approval applications you receive in the mail.
  • Only shop on websites that you know and avoid using your debit card for online purchases.

Important Links and Phone Numbers:

Equifax: 1-800- 525-6285

Experian: 1-888-397-3742

Transunion: 1-800-680-7289

Social Security Administration

Federal Trade Commission Identity Theft

IRS Form 14039


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About the Author

Private: Belfint CPAs

Belfint CPAs

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