Pass It On | How to Avoid Tax Scams

7 tips for preventing identity theft during tax filing season

Tax season: Most people dread it. Identity thieves love it. With documents like W-2s, 1099s and tax returns floating through the postal service and cyberspace, the risk of someone stealing your sensitive information is perhaps greater this time of year than any other. But you can lessen your chances of becoming a victim by following a few simple rules.

* Guard your W-2 and 1099 forms. These forms contain your name and Social Security number, along with the name of your employer, bank, stock broker or mutual fund, which makes them a gold mine for identity thieves. The Privacy Rights Clearinghouse, a nonprofit privacy advocacy group, recommends using a mailbox that locks or having your mail sent to a Post Office box. Also, especially this time of year, try to retrieve your mail as soon as possible after it has been delivered, and don’t leave it sitting out overnight or while you are on vacation.

* Beware of scams. Common tax scams in recent years have included false refund claims in connection with the Telephone Excise Tax Refund, notices that the Internal Revenue Service has rejected a filing, and e-mails that contained notification of an outstanding refund. It’s important to note that such e-mails claiming to be from the IRS are always fraudulent. The organization does not contact taxpayers through e-mail about issues related to their accounts.

* Go with a reputable tax preparer. If you decide to file through a tax preparer--either one you visit in person or one that offers a service online--research the company first. Fraudulent organizations often lure customers with promises of lower fees or faster service. “If it sounds too good to be true, it probably is,” says Anne Wallace, executive director of the Identity Theft Assistance Center in Washington, D.C.  “Tax information is so sensitive, it’s important for the preparer to be reliable and trustworthy.” Wallace suggests using the IRS’s list of online tax preparers as a reference guide.

* If you visit the tax preparer in person, examine their security practices. “Look at where and how they store their information and how they police their employees,” says Wallace. Adds Paul Stephens, director of privacy and advocacy at the Privacy Rights Clearinghouse: “Are you able to see tax documents from another individual lying on a desk or on top of a file cabinet? Or are you able to see computer monitors with other people’s information? That gives you an idea of how serious the company is about security.”

* When you do file, make sure you are using a secure connection on a private computer. “You wouldn’t want to file your tax return from an Internet café” says Stephens. Before filing, update your computer’s security software, and make sure the operating system has all the current patches. (For more advice, see “E-Filing Tax Returns? 10 Security Tips.”)

* If you opt to file through the mail, don’t just leave the return in your home mailbox, where it could be stolen. Stephens even goes so far as to recommend mailing it from inside the Post Office. “I don’t even recommend using letter carrier boxes unless you can do it just before a scheduled pick up,” he says, noting that on rare occasions, thieves have actually stolen entire mailboxes from right in front of the post office.

* Have your return check directly deposited into your account. Just as there is a risk of mail theft related to W-2s, there is a risk of theft associated with return checks. “We sometimes get so focused on online risks that people overlook the threats that exist in the real world,” Wallace says. “There is no question that [having your refund direct deposited] is safer and faster than waiting for a check in the mail.”

Staff Writer Katherine Walsh can be reached at more:

“E-Filing Tax Returns? 10 Security Tips”

“Opinion: It’s April 15. Do You Know Where Your Tax Return Information Is?”

Copyright © 2008 IDG Communications, Inc.

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