ID Theft and Tax Preparation: Did You Know?

By Mark Pribish, National Sales Director of Identity Theft Management Services, Merchants Information Solutions, Inc.

As I was preparing to write this month’s column on identity theft and tax preparation, it occurred to me that everyone could learn something from three personal and real life stories that made me scratch my head and say, “Huh!”

My first story begins a couple of years ago when I was driving in Ohio on business and stopped to fill my rental car up with gas. Right next to the gas station was a lawn mower repair business that had a BIG sign that said “WE REPAIR LAWN MOWERS.” Right next to that big sign was a little sign that said “we also do taxes.” It made me wonder why someone would be motivated to have their tax return done by a business that specializes in the lawn mower repair business.

My second story is about how my former neighbor – who has since moved to Michigan – was looking for a new job and made a decision to work for a tax preparation service. He was very excited to tell me that the open position for the tax preparation service company “required no experience and included training in just two weeks.” It made me wonder how someone would want to have their tax return completed by an individual with no previous experience and very little training.

My last story relates to a new network contact and casual acquaintance who told me that he and his wife just signed up for a new ID Theft service that can “guarantee that they will never become a victim of identity theft.” It made me wonder two things: one, how any company can guarantee any customer that they will never become a victim of identity theft and two, why an individual would believe any company can “guarantee that their customer(s) will never become a victim of identity theft?”

With the Tuesday, April 15, 2008 deadline just a couple of weeks away – along with your 2008 economic stimulus rebate check – here are some things to be aware of and to put in the “did you know” file:

  1. Did you know that almost every state requires an individual to have a license to cut hair, manicure nails, sell insurance, sell real estate, and/or practice law – but almost every state (except for California and Oregon) does not require a tax preparer to have a license?
  2. Did you know that not every tax preparer can represent you before the IRS – and that only a tax preparer that is an enrolled agent or certified public accountant (CPA) can represent you before the IRS relating to prepared taxes that they did not prepare?
  3. Did you know that a tax preparation service company - that conducts a background check on its tax preparers and has an up to date information security and privacy policy - is more likely to be responsible in safeguarding your tax return information?
  4. Did you know that tax preparation scams are one of the most recent trends in identity theft – so you should ask your tax preparer about their professional experience, certification, continuing education, and/or privacy policy?
  5. Did you know that your tax return includes sensitive and personal information that identity thieves steal – including your name, address, and social security number, along with your dependant’s names and social security numbers, bank account number and other financial account information?
  6. Did you know that the Federal Trade Commission (FTC), a U.S. government agency, has reported identity theft as one of their top complaints – and yet various state and federal government agencies are one of the biggest sources of data breaches because they require social security numbers on state and federal documents, while continuing to exhibit lax information security?
  7. Did you know that the IRS continues to warn taxpayers to be aware of numerous email and telephone scams – with the most common attempts to steal information through phishing and the fraudulent requests for information relating to 2008 rebate checks?
  8. Did you know that based on the fact that your social security number (as well as the social security number of your spouse and/or children) is linked to your current and former employer group, healthcare provider (doctor, dentist, hospital), health care insurance company (medical insurance), insurance agent (home, auto, and life), educational institution (student enrollment to financial aid forms), and financial institution – that NO ONE COMPANY can GUARANTEE you from ever becoming a victim of identity theft?

So I encourage all of you, the next time you have to select a tax preparation service or an identity theft provider, or before you respond to an email or phone call requesting personal information, ask yourself if it makes sense and whether or not you are putting you and/or your family at risk.

Copyright © 2008 Merchants Information Solutions, Inc.

Matt Ostapuk, Newsletter Editor