Tax Time More Lucrative For Cyberthieves With Increase In SSN Thefts In 2017

It’s that time of year again. You’ve received your W-2s, your 1099s, and all the other necessary forms to get those taxes filed. Yes, you can put it off until the middle of April, but you really shouldn’t. Income tax filing time is a prime opportunity for cybercriminals to bump up their cybercrime activity. Tax fraud continues to rise. And this season there is even more material for the thieves to work with. Not only is W-2 fraud still occurring en masse, but with the increase in stolen social security numbers in 2017, tax fraud is a likely occurrence too. Partly to blame is the Equifax breach late in 2017, which made 145.5 million U.S. residents potentially at risk for tax fraud.

In 2016 the IRS estimated that it paid out around $5.8 billion in fraudulent refunds. According to IBM, tax related spam was up 6,000% from 2015 through February of last year. W-2 fraud occurs when cybercriminals are successful at getting ahold of W-2 information. Often, someone in the human resources or accounting department is tricked by a fake email message into sending W-2 information to an executive. Often it is the CFO or CEO that is impersonated. It is dangerous because of the type of information that is on those forms: Full names, addresses, social security numbers, pay information, etc. Information from these has been seen for sale on the Dark Web for $40-50 per record.

Income tax fraud has always been a risk. However, with the number of data breaches that have occurred over the past few years that included the exposure of social security numbers, the risk has increased exponentially. At the current time, the IRS does not have a system in place to protect taxpayers whose tax ID numbers have been stolen. The best way to avoid this is to file your income taxes as early as you possibly can. According to the IRS website, "The failure-to-file penalty is generally more than the failure-to-pay penalty. You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date." 

If you are owed money from the IRS, that’s even better. The earlier you file, the sooner you’ll get your refund and prevent someone else from getting it fraudulently. There are some other tax time tips to consider:

• Beware of fraudulent email messages from tax software companies. The competition in that arena is fierce and they increase marketing messaging during tax season. Realistic-looking spam keeps on coming and it’s getting more difficult to detect the fakes. Always keep an eye open for these.

• If you do receive email from a tax preparer or software company, go directly to that website to log in rather than clicking links in messages.

• W-2 information is valuable. If you receive a request that it be sent to anyone, confirm the request by picking up the phone or personally making a visit to the requestor. Don’t email unsecured documents. Email generally is not a secure form of communication. Make sure the information is encrypted and password protected or can be dropped in a secured file. Don’t send it in plain text across email.

• Don’t click links or attachments that arrive in unexpected email messages or texts. Verify these first.

• Always use a strong and unique password for each of your online accounts.

In addition, remember that the IRS does not initiate communication with taxpayers via email, telephone, or text. They will always start with a letter sent via the U.S. Postal Service.