On Tuesday, the Federal Trade Commission released its annual list of the top complaints it receives every year, and ID theft was No. 1 for the 12th year in a row.
One very common source for ID theft? Tax returns.
According to Todd Davis, the chief executive of the identity theft protection company LifeLock, there are plenty of online dangers that should make people cautious when doing their taxes, but it’s not the fault of legitimate online tax services.
“I don’t want people to be afraid of doing their taxes online,” he said. “It’s actually very safe, people should look to take advantage of that convenience.”
Those who do file online, however, should make sure that they’re using a site whose address starts with “https,” which indicates the information is being transmitted safely.
But while online tax preparation services take pains to secure their information, the same cannot be said for the average person, who may be e-mailing returns to accountants or family members.
Davis cautioned that people should be very careful about e-mailing returns or sending them over peer-to-peer file-sharing programs, and make sure that they are using secure connections and e-mail addresses that haven’t been compromised. Users should also be sure to store their completed tax returns in a protected file.
Davis also shared advice on safety precautions for those who file a paper form.
“Don’t put it in your own mailbox, with the flag up. We suggest going into the post office yourself,” he said. He said savvy thieves target the blue street mailboxes, too, to try to get multiple tax returns at once.
Tax returns, he said, are a treasure trove of personal data for thieves.
“It’s got information on you, your spouse, your kids — all of your names, your address, birthdate, and sometimes even your bank account and routing numbers,” Davis said.
If thieves do get your data, it can be a messy process to undo. Victims will have to file a local police report and register with the Federal Trade Commission as a victim of identity theft. After that, they have to start monitoring credit reports, communicate with the Internal Revenue Service and — of course — keep a close eye on their bank accounts.
Remember, Davis said, that the IRS will never initiate communication with a taxpayer through e-mail. So don’t believe or open “notification” e-mails that claim you’re being audited or are coming into some unexpected returns.
“Some of it will look innocent enough, but they’re looking for the keys to the kingdom,” Davis said. “Forward them to email@example.com.”
He said that tax return ID theft has increased five-fold from 2008 to 2010, and that thieves stole more than 500,000 returns from taxpayers in 2011.
“Around 15.5 percent of all ID theft complaints are tax-related,” he said. “This is a big area.”