Few things can make one feel helpless like realizing you have been the victim of identity theft – particularly when it involves having a fraudulent tax return filed on your account.
Unfortunately, criminals are becoming more and more savvy. John Wilson, a senior fellow for threat research at Agari by HelpSystems, explained in a recent Forbes article that criminals can obtain an individual’s name, address, date of birth and Social Security number – known as full sets of credentials or “fullz” in the criminal underground – for an average of just $8 on the dark web.
This is all the information needed to open a credit card online, create fake driver’s licenses, health insurance cards or passports. Then it’s just another step or two to take out a mortgage or line of credit or steal the tax refund of their victims.
Wilson stated in the article that a relatively new twist on traditional identity theft is called synthetic identity fraud. A scammer starts with a stolen Social Security number but creates a made-up name, address and date of birth.
The fraudster then establishes credit with the fake ID, often by taking out a high-risk, high-interest loan. The scammer actually pays back the loan to establish a credit history for the synthetic identity. After several cycles, the synthetic identity has good enough credit to apply for a stack of credit cards. The thief can now run up the cards and disappear.
While nothing is failsafe, there are some steps that you can take to help reduce your risk of identity theft.
- Protect your tax return
To prevent someone from filing a tax return in your name, it’s a good idea to set up an Identity Protection PIN. This is a six-digit code that helps the IRS verify your identity when you file an electronic or paper tax return. That makes it harder for a scammer to use your Social Security number to file a phony return in hopes of obtaining a fraudulent refund.
Some things to know about an IP PIN:
- An IP PIN is valid for one calendar year.
- A new IP PIN is generated each year for your account.
- Logging back into the Get an IP PIN tool will display your current IP PIN.
- An IP PIN must be used when filing any federal tax returns during the year including prior year returns.
More about an IP PIN can be found on the IRS Website here https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin
- Create an online Social Security account
Creating a “my Social Security” account on the Social Security Administration’s website will let you monitor any suspicious activity involving your Social Security benefits.
- Request a credit report
Request your credit report via https://www.annualcreditreport.com/index.action and you can spot check past and present accounts to confirm no fraudulent activity has occurred.
The best credit monitoring services can be free, but some might charge a monthly subscription fee.
They’ll send email or text notifications if a new account appears on your credit reports. If you see a new account you don’t recognize and didn’t open, you can quickly try to deal with the problem.
- Freeze your credit reports
A credit freeze prevents most lenders and creditors from accessing your credit reports. At the same time, they will not open a new credit account in your name while the freeze is in effect. You can request a freeze with all three major credit bureaus, Equifax, Experian and TransUnion. It is a simple process to unfreeze your credit for a specified period of time and then it will re-freeze.
- Digital security
Consider using a password manager such as LastPass to manage and generate passwords for websites. Email is typically a huge vulnerability and should have the strongest password security. Our back office and accounting professionals here at Antares Group utilize LastPass as a best practices security measure for our firm and our clients.
- Shred important documents
Some identity thieves are not above rifling through trash receptacles, knowing that many people throw documents with sensitive personal information into the trash. A good paper shredder is an excellent investment for your home office. Make sure you shred bills after paying them, letters and statements from your bank, receipts, pay stubs and medical statements.
- Watch out for phishing
Phishing scams have been around for years and have only become more sophisticated. Phishing emails may appear to come from your bank, an employer, a supplier or someone in your company, asking you to click on a link or download a document that requires you to enter your username and password. By using multifactor identification, you are required to enter an extra code or credential to log into a sensitive account.
Tamra Newman, CPA, CVA, is a Tax Manager with Antares Group, Inc. She can be reached at thn@antarescpas.com.
