Tax ID theft awareness: Tips for tax preparers bear (p)repeating

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For most people, January offers a lull after the holidays. But if you’re a tax professional, the busy season just started. Now that figures are flying, the FTC reminds tax preparers, accountants, and others in the industry about the role they can play in fighting back against tax identity theft. Participate in events scheduled for January 26th through 30th – Tax Identity Theft Awareness Week – and consider five timely tips from the FTC.

What is tax ID theft? It’s when scammers file fraudulent tax returns using someone else’s Social Security number so they can grab that person’s refund. The first a consumer hears of it is when they file their own return only to learn from the IRS that someone has already filed in their name.

This year the FTC is marking Tax Identity Theft Awareness Week with a series of events to alert consumers and businesses to the steps they can take to reduce the risk:

  • January 27, 2:00 ET:  An FTC webinar co-hosted with the Treasury Inspector General for Tax Administration and AARP addressing how tax identity theft happens and what consumers can do if they’ve been a target.
  • January 28, 1:00 ET:  A webinar hosted by the FTC and the Veterans Administration with tax identity theft tips for veterans.
  • January 29, 3 ET:  A Twitter chat with the FTC and the Identity Theft Resource Center. Join the conversation on #IDTheftChat.

What specifically can tax profesionals do?

Make sure your own house is in order.  Job #1 is to put good data security practices in place at your business.

  1. Implement a “clean desk” policy to make sure sensitive data is safely stored when staffers are away from the office.
  2. Locked file cabinets are a must, but consider the extra step of moving the most sensitive stuff out of busy reception areas. That could reduce the risk of light-fingered passersby helping themselves to the contents of a drawer left open during one of those “I was just gone for minute” breaks.
  3. There’s no such thing as scrap paper when you prepare taxes. Virtually every document in your files or on your network could be treasure to an ID thief. And Social Security numbers – something you deal with every day – are the Hope Diamond for fraudsters. So the standard advice for all businesses about limiting the sensitive information you maintain and securely disposing of it when it’s no longer needed applies in spades to tax preparers.
  4. Use cost-effective tech tools to defend your network from hackers. Discourage clients from including sensitive information in unencrypted email. Opt for safer alternatives when sending or receiving confidential data and documents.

Spot the early warning signs of tax ID theft.  Tax ID theft isn’t always easy for a consumer to spot, but tax professionals are more attuned to the things that should make you go “Hmmm.” Here are some of the warning signs for individuals: if a return is rejected because someone has already filed with that name or Social Security number, if a client gets an IRS notice reporting wages from an unfamiliar employer, or if they spot activity about a tax return after they thought all issues had been resolved. For business clients, investigate further if the IRS refers to an amended return when the company has yet to file, if the company get notices about unfamiliar employees, or if they spot activity related to defunct or dormant affiliates or subsidiaries. The IRS has in-depth information for tax preparers, including a guide to identity theft written with your unique considerations in mind.

Serve as a resource if clients learn they’ve been victims.  You may be first to find out that a client has been the victim of tax ID theft. Have a portfolio in place laying out the corrective steps they’ll need to take. No time to create a kit from scratch? No problem. The FTC has free resources – brochures, phone numbers, sample letters and forms, etc. – you’re welcome to adapt. The IRS also offers free materials to help you help your affected clients.

Offer your clients advice on preventing ID theft.  In New Orleans, it’s called lagniappe – a complimentary something extra a business gives a loyal customer. The FTC has a library of materials about ID theft prevention in English and Spanish that you can download and print from your computer. Tuck a title into the envelope when you’re mailing forms or invoices. Have a “take one” stack in your reception area. Include them in the welcome kit you give new clients. (Some publications are available free from the FTC's Bulk Order site.)

Take on tax ID theft awareness and prevention as a pet project.  For tax professionals, tax ID theft is a perfect topic for a tweet, newsletter feature, banner, link, web article, or presentation to a professional or community group. The FTC has you covered with sample materials, also available in Spanish.



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