Tuesday, February 23, 2016

Taxpayers Have False Sense of Security about Identity Theft

Tax identity theft is a serious topic at any time, but especially at this early point in the 2016 filing season. The following article from Accounting Today provides some timely information.

Taxpayers Have False Sense of Security about Identity Theft

Taxpayers are not doing enough to protect themselves from identity theft-related tax fraud and a majority of them don’t expect it to happen to them, according to a new survey.
The survey, from security company IDT911, found that 63 percent of Americans are taking an “it could never happen to me” approach and say they aren’t worried about their identities being stolen this tax season despite high-profile data breaches involving the Internal Revenue Service and some service providers.
Nineteen percent admitted they have not ensured their Wi-Fi network is password protected if they are filing their taxes online, and 49 percent said they don’t even lock their mailbox when receiving their tax refund through the mail, potentially exposing sensitive personal and financial information to thieves.
Despite the uptick in tax-related identity theft incidents, 48 percent of those surveyed believe the holiday shopping season is the most risky time of year. Tax-filing season came in second at 30 percent.More than a third (38 percent) of the 1,500 adult U.S. consumers surveyed said they’re unsure how to vet a tax preparer, including an overwhelming 92 percent of Millennials aged 18 to 34. Over half of the respondents (52 percent) said they do not trust, or are not sure if they trust, online tax services, likely due to the recent data breaches of multiple providers.
Only 12 percent planned to file their taxes in January despite experts advising consumers to file as early as possible in order to beat out identity thieves who might potentially claim their tax refunds.
“Tax season has become fraud season,” said IDT911 chairman Adam Levin. “As breaches have become the third certainty in life, cybercriminals are able to glean information from literally hundreds of millions of compromised records in order to target consumers in tax related identity theft and phishing schemes. In today's dangerous digital world, each of us must be vigilant and remain on high alert.”
IDT911 said its fraud center saw a 154 percent increase in tax-related cases from 2014 to 2015, with 2016 showing no signs of slowing down. Tax refund fraud losses are estimated to reach $21 billion by 2016, according to the Treasury Inspector General for Tax Administration, and the Federal Trade Commission recently announced that it received a 47 percent increase in identity theft complaints in 2015, with tax refund fraud being by far the biggest contributor. These numbers are expected to rise if the proper precautions are not put in place.
Despite the increased likelihood of identity theft during tax season, many Americans may not know where to go when they are eventually impacted. More than a third of the survey respondents (38 percent) are unsure if their financial services or insurance providers offer identity theft or fraud protection services. The majority of respondents (57 percent) said their financial institution would be the first entity they’d contact once they learned they were the victim of a data breach.

Please contact our office at (630) 986-0540 or taxes@brummetandolsen.com with any questions.

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