Protect your clients from identity theft and fraud

Tax season is a time for criminals to take advantage. Here’s how you can warn your clients.

The IRS is in the midst of a digital transformation process, aiming to make preparing and filing taxes easier for taxpayers. But, with these improvements to technology and customer services processes, also comes risk for fraudsters to hack or scam their way into your clients’ returns and personal information.

To mitigate the concern this tax season, there’s guidance you can give your client that can apply all year long. Here’s how you can keep your clients’ personal data safe.

Consider your own habits first.

To make sure your clients feel safe, look at your own habits of collecting and storing personally identifiable information. Even if it’s as simple as downloading a document with a client name and address on it to your personal device, it may lead to information being compromised and used for unscrupulous purposes.

A good precaution is to minimize the data you collect from clients. This prevents unintentional slips from happening. Of course, personal data is required in our line of business, so when you do need to collect it, do it in person or over encrypted email. Additionally, have a clear retention policy that your clients are privy to so they understand how long you’ll store their information.

A recent survey of our clients showed that 70% want to know how they can better protect their personal and financial information. So, sharing these tips will be welcomed by your clients.

Tax time means other financial professionals are gaining access to your clients’ information. Just like you share your security policies and practices with clients, encourage them to ask for their tax preparer’s policies as well. Even online services have privacy statements; they’re worth reviewing in detail. A few things to note are safeguards in place that prevent systems from being hacked and for how long and to what purpose personal data will be stored and used.

Make sure clients know what to expect.

If clients know what to expect from the IRS, then they’re more likely to recognize a phishing attempt. Be sure your clients know the IRS will never call, text or send social media messages with a request for personal or financial data. If a client receives one of these messages, they should refuse to give information and immediately contact their tax preparer.

Additionally, they should know what to expect from their return. The IRS will notify citizens if more than one tax return was filed with the same social security number or if they owe additional taxes. Any warning like this should be raised to their tax preparer. It could be a sign of fraud.

They should also know what to expect from their tax preparer. If they don’t recognize the phone number their tax preparer calls from or their voice sounds different, they should hang up and call back the office directly. Criminals are getting creative in how they dupe unsuspecting victims.

The IRS provides the latest phishing and online tax scams on its website; consider passing the information to your clients so they know what to look for.

Advise clients to implement holistic protections.

While tax time provides more opportunity for criminals to scam their way into your clients’ data, it’s important to have protections in place all year long. It’s a good reminder to review data security in all areas of their life, from privacy settings to unique passwords and multifactor authenticators. The data gleaned by tax scammers can cause further damage later.

Take action if tax fraud happens.

Even with precautions in place, tax fraud can happen. If your client experiences tax fraud, they should first let their tax preparer know. They may need to complete an IRS Identity theft affidavit.

It’s wise to consider credit monitoring services to make sure the swindlers don’t open new accounts or initiate any other activity in their name. Some credit cards and banks offer free credit monitoring services. For more protection, it’s worth looking into identity theft insurance offered by homeowner’s or other insurance companies.

During tax season, the best way to serve your clients is to educate them on the latest tax scams and digital security threats.