A Letter from the Chairman
Filing online may be easier and faster, but it also makes us more vulnerable to tax-related identity theft.
Thursday, March 10, 2011
Close your eyes and recall the words of an old holiday standard: “It’s the most wonderful time of the year. . . .” Now picture tens of thousands of jovial IRS and state revenue agents whirling around their desks in 10 national service centers and at least 50 tax collection departments across the land. For the government, it’s the equivalent of Thanksgiving, Black Friday, Cyber-Monday and Christmas all wrapped up in a neat little package over a three-month period.
I think I speak for most of my fellow Americans when I say that we dread this time of the year. However, for many there is some solace: Like going to McDonald’s, you pay the check and actually get some change back, i.e., your own money.
Over the past few years, the government—aided by technology and ever-creative, brand-name tax-preparation services—has created newer, simpler and more efficient ways for folks to file returns, which has resulted in faster refund checks finding their way into our mailboxes. That’s the good news. However, as with all things technology-related, it is a double-edged sword. Unfortunately, each year more and more Americans are suffering the downside of easy filing and fast payments.
Identity thieves have discovered that the quick processing of hundreds of millions of tax returns is based, really, on trust. The IRS scans submitted tax returns in the most cursory ways. If there aren’t any obvious or glaring errors, they cut a check.
With just a name and Social Security number, thieves can do damage that takes years to undo. Some file fake W-2s in victims’ names. Others create enticing banners and links that transport unsuspecting taxpayers to sham “IRS” websites that collect personal information—which the real IRS never does.
Tax-related identity theft can be the gateway to a host of other identity-related issues with banks, credit extenders, medical providers, employers and law enforcement. Tax records are the Holy Grail for identity thieves. Beyond your name, address, Social Security number and employment data, they can list maiden names and information about spouses and children.
This month’s special issue, dedicated to tax-related identity theft, provides a detailed look at an underreported problem. We talk to CyberScout’s chief privacy officer, Eduard Goodman, about the best practices for filing online tax returns and what to look for when considering tax-preparation companies. We highlight the case of one Midwestern retiree who found himself trapped in the bureaucratic labyrinth that is the IRS after his identity was stolen—his tax return collided with a false version filed by the thief. We explore the labyrinth itself and report on recent criticisms leveled by the U.S. Government Accountability Office, which regularly reports on IRS information security and identity theft prevention measures.
As always, we hope you find the subject fascinating and the reading not too taxing.
Adam K. Levin
Chairman and Founder, CyberScout
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