Approximately half of U.S. taxpayers are uneducated about the risks of identity theft during tax season, according to a new survey, but the majority trust their tax preparers.
The survey, on behalf of Trilegiant Corp.’s PrivacyGuard identity theft and credit managment service, found that while the respondents say they take steps to protect themselves against identity theft and remain concerned about the possibility of a data breach when sharing their personal information, they remain uneducated about the prevalence and methods of tax-related identity theft. The company noted that tax or wage-related fraud was the most common type of identity theft complaint in the recently released Federal Trade Commission 2010 Consumer Complaint Report.
According to the PrivacyGuard survey, almost two thirds of respondents (64 percent) reported that they worry that the organization they are sharing their personal information with could suffer a data breach. Retailers were chosen overwhelmingly (45 percent) as the least trustworthy. Surprisingly, when a data breach occurs, respondents are more likely (44 percent) to blame the institution that was breached than the thieves that stole the data (35 percent). Also, roughly a third of consumers admit to using the same login and password for each site they transact with, making a breach that much more damaging.
While many respondents lacked faith in retailers or other institutions to guard their personal information, the survey found a big increase in the level of trust that tax payers have in their tax preparer. Despite cases of tax preparer identity theft in several states last year, only 30 percent reported this year that they are concerned when they choose a preparer about the possibility of becoming a victim of identity theft, while 11 percent reported being very concerned and another 30 percent are not at all concerned. Last year half of the survey respondents said they were somewhat or very concerned.
Respondents have grown increasingly ignorant about the methods the IRS uses to initiate contact with tax payers, with 50 percent selecting the wrong option: 37 percent believe the IRS can contact them via email, mail or phone and 13 percent believe that the IRS will contact them through email. The IRS does not initiate contact with taxpayers through email. Last year the survey results showed a similar trend, with 19 percent admitting that they did not know how the IRS initiates contact and 33% selecting the email, mail or phone option.
"We believe that Americans are generally very educated as to the consequences of identity theft and are taking steps to protect themselves," said PrivacyGuard director Christine El Eris in a statement. "However, taxpayers need to be aware of the unique risks they face during tax season and remain on guard during this time."
PrivacyGuard offered the following tips on how to prevent identity theft during tax season:
When Preparing Your Return
1. Be aware of suspicious emails and phone calls regarding your tax refund or tax filing – Check the IRS Web site for tips on how to spot scammers and thieves posing as the IRS and a list of known phishes.
2. Be diligent when choosing your tax preparers – Ensure that you are working with a credible firm and be extra cautious about new or seasonal offices. Check the IRS Web site for more tips on how to choose a tax preparer.
3. Secure your computer –If you file taxes electronically, be sure to install updated firewalls and anti-spyware protection to help keep your personal data out of the hands of thieves.
4. Create a unique login and password if you are using an online service to prepare or file your return.
During and After Filing
1. Mail securely – If you file via mail, be sure to mail your return directly from the post office – do not leave your tax return in your unlocked mailbox or at the curb for pickup by your local mail carrier. Your personal information will be vulnerable until it is retrieved by the postal carrier. It is wise to send tax information by first-class mail with a tracking number.
2. Safeguard sensitive information in home and outside – Frequently the greatest threat to personal information comes from service providers or in-home workers or acquaintances. Keep paperwork in a safe location. When carrying this information out of the house, be sure to keep it on you, or if you must leave it in the car, make sure it is not visible.
3. Micro-shred your documents – Cross-cut shredders just don't "cut" it these days. Use a micro-cut shredder for maximum security. The shred size on micro-cut machines is much smaller; documents are literally turned into dust, offering the highest level of security. And since even a seven-year-old receipt can be used by a thief, shredding is still one of the simplest ways to prevent identity theft.
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