Among many other daily activities, when we shop online, log into our work computers, sign up for any service that requires personal information, and apply for loans or credit, we are putting our identities and the identities of others at risk.
Major breaches have occurred, at least one of which probably affected us all – Anthem Health Insurance, Home Depot, the Internal Revenue Service, Sony, USPS, Target… the list goes on. We all rely on vendors and the government to secure our information, but there is not much consumers can do to ensure this.
We have seen an increase in failed and successful attempts to file fraudulent tax returns. Personal information is mined from leaks like those listed above, and tax returns requesting tax refunds are fraudulently filed. Sometimes the IRS catches the fraud, rejects the fake return, and sends an informational letter to the taxpayer. Other times, the IRS accepts the fake return, issues a fraudulent refund, and the taxpayer doesn’t know about the breach until their legitimate tax return is rejected.
When a taxpayer’s social security number is used in a fraudulent tax return, the IRS issues an “IP Pin” that must be used on all future tax returns. This prevents future fraudulent filings. For those that have not had a fraudulent tax return filed, filing as early as possible can help prevent successful filing of fraudulent tax returns.
The solution to identity theft is not to stay offline, to stop electronically filing tax returns or to start using cash only for purchases at stores. Complex passwords to devices, websites and software programs that are changed regularly, cyber security insurance, virus protection software for web browsing and regular credit monitoring can go a long way to protect you from major damage.
The FBI estimates that on average 210 days go by before a breach in security is detected. Prevention and safeguards for early detection are key.
This article is intended for educational purposes only and is not a substitute for obtaining competent accounting, tax, legal, or financial advice from a certified public accountant, attorney, or other business advisors. You should not act upon any of the information in this article without first seeking qualified professional guidance from your business advisors on your specific circumstances. The information presented should not be construed as advice or guidance from BFBA.