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Tax time is prime season for identity thieves. As confidential paperwork is brought out of file boxes, tax returns filed online, and other highly sensitive information handed over to accountants, identity thieves have ample opportunity to capture some of this private data from individual taxpayers. Because digital identity theft has become a high profile threat in the media, paper-based identity theft, has to some degree, become ignored. Businesses have gotten into the habit of focusing their ID theft prevention efforts on upgraded software and firewalls, no longer seeing paper-based identity theft as an issue. However, The Business of Federal Technology, Stephen Warren, Acting Assistant Secretary for Information and Technology at the Department for Veterans Affairs cited upwards of 98 percent of data breaches continue to involve "physical paper." In fact 72% of all US identities stolen, are stolen offline.*
Including a shredder as part of your identity theft prevention strategy is essential for businesses of every size managing paperwork during tax season.
As a business owner, you keep a lot of records and have many credit accounts, making you vulnerable to identity theft, especially during tax time. When you're filing and distributing all your tax forms, you'll need to know how to keep your information safe.
Most businesses maintain customer information as digital records. However, there are always instances when customer data shows up on paper, either to review a customer account with an accountant or to verify personal employee information for tax purposes.
Having a formal document destruction policy defines shredding procedures for your employees to prevent identity theft from happening to your company and your customers. These types of policies become especially helpful during tax time when questions arise about what records should be stored and what should be shredded.
A formal policy allows you to have a routine procedure that will assist with everyday shredding, which will become critical during tax time when deadlines loom and documents that have not been reviewed for a while, suddenly see the light of day. All of these procedures reduce costs and headaches, as well as increase legal protection if ever you are questioned.
Create a policy that fits your business. Integrate applicable rules with your own actual practices to create a system that makes document destruction an easier process.
Any policy should include at a minimum the following types of information:
The theft of employer identification numbers for use in refund fraud does not get as much attention from the press, the public, and the IRS as the theft of Social Security numbers and taxpayer identification numbers, but when it happens, victims have little recourse.
The extent of EIN theft is unclear. The IRS has released information about tax-related identity theft, but it does not differentiate instances in which a stolen EIN is used in conjunction with other fraudulent identification numbers.
Here is how a company could become a victim of EIN-related tax fraud. A fraudster can file a bogus income tax return with a fabricated Form W-2 that includes a legitimate EIN and bogus wages. The IRS receives the return and issues the refund to the fraudster. Later, the IRS matches refunds against the Forms 941, "Employer's Quarterly Federal Tax Return," filed by the employer, which reveals a discrepancy. The IRS then charges the employer for the false refund. Make sure documents with EIN's are properly shredded. In most instances, EIN identity thieves will target larger companies who may see the misfiled EIN as an oversight.
Large companies or large accounting departments can use these tips for finding a heavy duty paper shredder for tax time.
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*Paper records account for most VA data breaches - Frank Konkel Aug 08, 2013 The Business of Federal Technology
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