Tax time is a particularly busy season for identity thieves. The IRS reported over $227 million claimed in fraudulent tax refunds in 2016. That money could be taken from employees’ pockets, increasing stress and distraction at work, if companies do not take preventative steps to help them mitigate risk of falling victim to this growing crime.
With a quarter of a million victims of tax-refund fraud last year – it pays to be smart on how to avoid this continually growing form of identity theft. Recently, we held a webinar with the Identity Theft Resource Center (ITRC), which highlighted the severe consequences that income tax fraud victims face. Taxpayers often rely on their tax refunds for everything from luxury items to making ends meet. As the ITRC uncovered in their annual survey, a delayed tax refund can mean resorting to other avenues such as borrowing from family members and seeking loans in order to secure necessary funds. The increased stress, distraction, and crunched wallet can have a significant impact on workplace productivity.
Source: Identity Theft Resource Council, 2016 Aftermath Survey
The IRS has implemented over 80 protocols in partnership with state authorities designed to reduce fraud. But, this doesn’t mean that those filing are free from responsibility. Below are a list of tips to pass on to employees in order to help them minimize their risk of tax fraud and keep their minds focused on their work, while at work.
File Early. Despite an indication from the IRS that tax refunds may be delayed this year, filing early is still the best way to thwart thieves by narrowing the window of time available to file a false claim.
Find a Reputable Accountant or Tax-filing Software. Not only does using an accountant or online filing services reduce your chances for errors, finding filing support can help you file more securely. However, not all tax preparation is created equal. The American Bar Association cautions filers to avoid tax preparers who promise they can obtain a higher refund and to avoid preparers that base their fee on the amount of a return. The IRS provides a convenient tool to identify properly-credentialed preparers for your employees.
Secure Digital Data. When transmitting data to a tax preparation specialist or an online software, be sure to use a secure network to prevent data from getting into the wrong hands. Protect your device by downloading anti-virus and anti-malware software that is updated regularly to keep watch for evolving threats. Consider anti-keylogging and anti-phishing technology like Iris’ Online Data Protection software that scrambles keystrokes and alerts users to malicious websites designed to steal personally identifiable information (PII).
Shred Sensitive Documents. Those filing taxes often find themselves with stacks of forms and receipts that contain social security numbers, addresses, and other PII. Despite the rise in cybercrime, “dumpster diving” for sensitive documents is still a common tactic identity thieves use to obtain PII. Be sure to shred sensitive documents before disposing of them.
Stay Vigilant against Scams. Identity thieves are becoming increasingly clever in the methodologies they use to steal PII that can be used to fraudulently file tax returns. Scammers pose as IRS agents and solicit sensitive data through email, phone, and by mail. With the implementation of the Affordable Care Act (ACA) tax regulations, there has been a surge in scammers sending fraudulent violation notices demanding payment. It’s important to remember that the IRS will never ask for personal details or request immediate payment.
If one of your employees receives a suspicious communication or thinks that they’ve been a victim of tax-return fraud, they should contact the IRS immediately. The FTC has an excellent resource on how best to proceed. Additionally, according to Laura Lively, Executive Director of PaymentsEd, employees should inform their company’s human resources department if they’ve been a victim of tax-return fraud because it could indicate a more widespread issue that could affect other employees. Employers can take proactive steps to minimize potentially damaging exposure of employees’ records by implementing an annual security training for all members of the HR department, cyber awareness training for all employees and developing a standard operating procedure for handling requests for employee data.
Like all types of identity theft, personal tax data stolen at one point of time may not be used to commit fraud immediately. Iris Identity Protection constantly monitors the deep and dark web where sensitive information is bought and sold. Alerts are sent to users if suspicious activity is detected so action can be taken quickly and minimize potential damage. To learn more about how Iris can help protect employees from identity theft and help them stay productive at work, request a demo and for more identity protection tips, sign up for updates from Iris.