Tax Identity Theft: More People Have Refunds Stolen, IRS Reports


Davis, who founded LifeLock seven years ago, said personal information related to filing taxes, including Social Security numbers, could be stolen a number of ways. Many tax filers expose their information when they store their tax return documents in public file-sharing services, such as the recently shut down MegaUpload.

He said some file-sharing networks allow anyone on the network to search a user's hard drive. He said LifeLock once pulled hundreds of thousands of tax returns through one file-sharing service, which included filers' names, birth dates, Social Security numbers, number of children and direct deposit routing numbers for banks.

"A lot of people have no idea that they've exposed themselves," Davis said. "It could have been caused by kids or grandkids downloading music."

The challenge with identity theft is that after your information has been compromised, the most essential data, such as your name, birth date and Social Security number, usually stay the same.

Once thieves have the information, they can commit crimes again.

Davis said LifeLock has "proactive" services that, for example, inform customers when credit card accounts are opened under their identities.

Contrary to what some tax filers wary of online services may think, Davis said people should not be afraid of filing their taxes online.

"Probably one of the safest things you can do is file with an online provider that saves the info into a secure cloud," he said. "When you save information in your own hard drive, unencrypted and not password protected - even if you mail your tax filings in a blue mailbox - criminals know where to look."

The IRS provides guidance on what to do if your tax records fall into the hands of Identity thieves, and tips to prevent it. Those tips include:

1. Don't carry your Social Security card or any documents with your SSN on it.

2. Don't give a business your Social Security number just because it asks.

3. Check your credit report every 12 months.

4. Protect your personal computers by using firewalls, anti-spam/anti-virus software, update security patches, and change passwords for Internet accounts.

5. Don't give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know whom you are dealing with.

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