Tax fraud is on the rise
In recent years, incidents of tax fraud have risen dramatically due to the ease with which criminals can obtain stolen social security numbers. Thieves use this information to file false tax returns and collect refunds from the IRS. According to a 60 Minutes investigation, stolen identity tax fraud cost US tax payers $5.2 billion last year alone. Government officials expect this amount to increase to $21 billion by 2016.
To carry out these crimes, scam artists only need a victim’s social security number and date of birth. That’s it! Tax returns are filed using fake employment and earnings information, and a refund is sent out just a few days after filing. It’s such a simple process, but it has terrible repercussions for the people whose identities were stolen. They don’t know they’ve been victimized until their own, legitimate, tax return is rejected by the government, which believes the earlier return (filed by the fraudster) is the real one. The victims’ money and their lives are held up for weeks or months while the government sorts through the mess.
One of the easiest places a thief can find the information they need is the mailbox of anyone waiting on a W-2 or 1099-MISC form. Those letters are required to be mailed in envelopes with the words, “Official Tax Document Enclosed.” It’s a clear signal to anyone with bad intentions.
Protect those who work so hard for you
What can you do to protect your employees and contractors? Use WageFiling’s SSN Masking when e-filing your forms, and your people’s social security numbers will be hidden. We’re the first in the industry to provide this service for all W-2 and 1099-MISC forms. Our system replaces each of the first five digits of any social security number or employer identification number with an X, securing that number for anyone who receives the form in the mail. SSN Masking also provides the opportunity to securely email your forms, saving money on paper and postage.
Not only are you protecting your people, but using SSN Masking helps you, too. If SSN Masking is not used, and a contractor’s recipient 1099-MISC copies are stolen from the mail, the person or business who sent those forms may be held liable for damages.
Employers and small businesses can help prevent stolen identity tax fraud by filing electronically with WageFiling and using our SSN Masking for all your distributed forms. Visit our identity protection page today to learn more.