Staying Diligent During This Tax Season

Well, it’s that time of year again – tax season! By now you should have received any tax forms concerning your income, representing another opportunity to keep cybersecurity in mind and minimize fraudulent actors’ attempts to separate you from any refunds you may be expecting.

File Early

If you prepare and submit your taxes early, good for you! If you don’t, you may want to try filing early because according to cybersecurity experts and the IRS, doing so reduces the risk of tax fraud. A known scam is for criminals to try to submit fraudulent tax returns using stolen Social Security numbers to claim refunds. If a criminal files before you do, reclaiming your refund is a lengthy and stressful process.

Here are some other ways to reduce the probability of experiencing a tax scam:

1. Tax preparation and other bogus scams:  Unscrupulous tax preparers often manipulate tax filings for inflated refunds, leaving you liable for errors. They also promote false claims, such as bogus fuel tax credit requests. They offer to help you set up your online IRS accounts with the aim of stealing your personal information. Additionally, scammers may encourage you to invent income and withholding information to secure larger refunds. Such claims can result in penalties and repayment obligations.
2. Misinformation on social media:  Validate what you read or hear on social media, especially concerning W-2 schemes or misleading tax deductions, which can encourage you to submit false information in the hope of getting a refund. You should be careful who you follow on social media for tax advice. Unlike hacks to fix a leaky kitchen sink, relying on social media to boost your refund is a bad idea and can lead to penalties.
3. Phishing, smishing and identity theft:  As noted in previous articles, you also can be targeted through phishing emails and smishing text messages that pretend to be from the IRS. These messages try to trick you into revealing personal or financial information. Similarly, these fraudsters will impersonate IRS representatives to “help” you set up online accounts, only to hijack the process and steal your sensitive data.
4. Fake charities and taxpayer exploitation:  In times of crisis, scammers set up fraudulent charities to exploit generous taxpayers. These fake organizations often lack IRS tax-exempt status, meaning donations may not be tax-deductible.

Minimizing Your Risk

Along with filing your tax returns early, if you routinely watch out for bogus emails and text messages, you are already taking steps in the right direction. If you routinely enable multi-factor authentication (MFA) for online accounts you’ve set up, you further protect your IRS filings, and accounts with your financial institutions. This additional verification step makes it much harder for hackers to gain access to your account—even if they have your password. Below are some additional steps you can take.

1. Secure your return with an IRS IP PIN:  The IRS offers an Identity Protection PIN (IP PIN). This six-digit code prevents unauthorized tax filings using your Social Security number. You can apply for an IP PIN through the IRS website. While we recommend that everyone signs up for an IP PIN, this is especially true if your SSN has been exposed to a data breach. Once issued, this number should be kept private and used only when filing your return.
2. Ask about your tax preparer’s cybersecurity practices:  If you use a tax professional, ensure they take cybersecurity seriously. Ask these critical questions and take note of their responses: How do you protect client data? Do you use encrypted portals for document sharing? Who has access to my information within your firm? How do you back up sensitive tax records? How long do you store tax records? Encryption for protecting data, documents, and communications is critical, and you want them to limit who can access your records. You also want a tax service that uses encrypted, secure backup systems and only stores your records for three to seven years.
3. Safely exchange tax documents:  Avoid emailing tax documents as regular attachments. Instead, use encrypted email services or a secure file-sharing portal your tax preparer provides. If mailing documents, send them through a trusted courier service with tracking options. 
4. Back up your tax records:  Make digital and physical backups of your tax documents. Store electronic copies in an encrypted cloud storage service or an external hard drive (or both!), and keep printed copies in a secure location. The IRS generally recommends retaining tax records for three years, but depending on your situation, you may need to keep them longer.