By now, you’ve likely heard about Edward Snowden, the NSA and the lack of privacy you actually have. Some folks find this really scary. It can be much more serious than that. There are several published examples of identity theft causing false arrest, loss of jobs, inability to get credit, inability to get medical care, and more. (See http://www.examiner.com/article/wisconsin-s-ugly-side-of-identity-theft for more)
Your private tax information may not be so private. Anyone with your name and social security number can file a tax return posing as you, collect a refund, and disappear. I had a client who filed her 2010 return in April 2011. IRS notified them a few months later that a return had already been filed. They signed an affidavit that the April return was indeed theirs. They received the refund in June 2012. Could you live without your tax refund for over a year?
Keeping your information private requires changing how you do business to improve your odds.
In the next few articles, I’m going to discuss steps you can take. Some might sound a bit extreme, but it’s up for you to decide.
Regarding taxes in particular, ask your tax professional how they protect your information. Understand when the electronic files are encrypted. Are paper files kept locked? Will they give your information to anyone expect the IRS, state tax authority, and you? Who at the firm can handle your information? At my firm, we are extremely cautious with client information.
Look for more on privacy in this space over the next few weeks. The more we all learn, the less trouble we’ll all have from identity theft.