News & Updates

Get Your Billions Back Before Someone Else Does

By Ryan Coyle

February 17, 2015

It's tax season!  While H&R Block tells us it’s refund season and we should be getting our billions back in refund money, there are other people lining up out there to step ahead of us to take our refund checks. Recently,  Intuit suspended the filing of state tax returns after spikes in fraudulent returns were submitted using their popular TurboTax software (e-filings have since resumed) and the tax authorities in 19 states suspended reception of returns using the software.   We now know state tax returns are much more susceptible to fraud as they don’t have the same types of protection and security in place as they do on the federal level. While none of the parties involved indicated that they were hacked, Intuit still seems to be the focus of the attention. Intuit claims that there has been no breach of their information systems. 

There may be some truth in Intuit’s claim.  Other high profile computer breaches have put millions of personally identifiable information out into the wild.  Most notable among those was the Anthem breach.  Anthem is one of the largest health insurers in the United States, although you may know them better through their affiliate companies, Blue Cross Blue Shield or Amerigroup.  Hackers purchase identity profiles of consumers, which can be gathered through a variety of hacks and then collated.  This information is then put together and used to generate a fraudulent return on the consumer’s behalf.  The IRS has estimated that it paid out about $5.2 billion in identity-theft related claims just last year (although it also claims to have blocked another $24.2 billion as well).

As you move along the tax preparation process here are some tips to help keep your information safe and help prevent fraud:

• Consider an identity protection service – These types of services offer comprehensive identity protection along with credit monitoring.  LifeLock and AllClear are companies that provide this type of service.  While you can duplicate many of their services on your own with a little self-awareness and personal credit monitoring, they do provide a dashboard type interface to help you protect your identity and credit.  They also offer services to monitor your children’s accounts.  This can be important because you generally aren’t monitoring your kid’s accounts for fraud.  You assume that little Timmy isn’t opening up an account with Macy’s.  However, children’s accounts, should they become compromised, are difficult to nail back down (as the fraud goes on for a long time until the bills start showing up at your house)
• Don’t leave tax software installed on your computer - I see this all the time, but leaving the software installed on your computer lets others know how you prepare your taxes.  This might not generally be a big deal, but if your computer becomes lost, or compromised, that information can be readily available to people you don’t want to be see it.
• Don’t store your return information on your PC - This goes back to item 2, but is also a good idea.  The best place for your return once you’re done with it is printed out and stored in your personal records.  If you want to keep an electronic copy, consider burning the file to DVD or putting it on a USB key that you can secure.  One that isn’t always connected to your computer would be preferable.
• File early – This isn’t an option for everyone, depending on your own tax situation, but filing your own taxes before the bad guys can attempt to file one on your behalf generally puts you in control.  Unfortunately most people don’t know that they’ve been a victim until after they submit their own return and it’s rejected as a return has already been submitted in their name.  Beating the bad guys to the punch puts you in control as once the bad guy tries to submit a return on your behalf and it is rejected, they’ll move on to the next.  They don’t have the ammunition in most cases to dispute returns.  These types of crimes are also almost always crimes of opportunity.  If you shut the window ahead of them, they’ll move on.