Since benefit plans are covered by tax regulations, I regularly read tax publications that come from our friends at the IRS. While not purely “benefits” related, I did think that the information in publication FS-2012-12 was interesting. It is the latest in a series of IRS tips on how to avoid identity theft.
Here are some of the top things that the IRS wants taxpayers to know about identity theft avoidance: so you can avoid becoming the victim of an identity thief.
- The IRS does not initiate contact with taxpayers by email to request personal or financial information. The IRS does not send emails stating you are being electronically audited or that you are getting a refund.
- If you receive a scam e-mail claiming to be from the IRS, forward it to the IRS at firstname.lastname@example.org.
- If you discover a website that claims to be the IRS but does not begin with ‘www.irs.gov,’ forward that link to the IRS at email@example.com.
- If your Social Security number is stolen, another individual may use it to get a job. That person’s employer may report income earned by them to the IRS using your Social Security number, thus making it appear that you did not report all of your income on your tax return. When this occurs, you should contact the IRS to show that the income is not yours. Your record will be updated to reflect only your information. You will also be asked to submit substantiating documentation to authenticate yourself. That information will be used to minimize this occurrence in future years.
- Your identity may have been stolen if a letter from the IRS indicates more than one tax return was filed for you or the letter states you received wages from an employer you don’t know. If you receive such a letter from the IRS, leading you to believe your identity has been stolen, respond immediately to the name, address or phone number on the IRS notice.
- If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost wallet, questionable credit card activity, or credit report, you need to provide the IRS with proof of your identity. You should submit a copy of your valid government-issued identification – such as a Social Security card, driver’s license, or passport – along with a copy of a police report and/or a completed IRS Form 14039, Identity Theft Affidavit, which should be faxed to the IRS at 978-684-4542. Please be sure to write clearly. As an option, you can also contact the IRS Identity Protection Specialized Unit, toll-free at 800-908-4490. You should also follow FTC guidance for reporting identity theft at www.ftc.gov/idtheft.
- Show your Social Security card to your employer when you start a job or to your financial institution for tax reporting purposes. Do not routinely carry your card or other documents that display your Social Security number.
- While preparing your tax return for electronic filing, make sure to use a strong password to protect the data file. Once your return has been e-filed, burn the file to a CD or flash drive and remove the personal information from your hard drive. Store the CD or flash drive in a safe place, such as a lock box or safe. If working with an accountant, you should ask them what measures they take to protect your information.
You can get more tips from reading FS-2012-07 and FS-2102-8.
While not specifically directed to plan administrators, I think point 8 above is a useful one to remember if you are submitting forms electronically. There have actually been reported instances where company and benefit plan identities have been stolen so don’t assume identity theft applies only to individuals.
And since we are talking about “identity theft,” plan administrators should also be reminded that they have a lot of information about participants and beneficiaries that would be very useful to thieves. Make sure you have appropriate security protocols built into your administration process to avoid being a source of information that thieves can use to steal participant’s identities.
By Keith R. McMurdy