Taxpayer Data Theft Up 60 Percent Nationwide

Marquette, Mich.March 29, 2018 –  The Michigan Department of Treasury is joining the Internal Revenue Service, state tax agencies, and the tax industry to warn tax professionals to be on alert for possible taxpayer data theft scams in the final weeks of the income tax filing season.

“Tax professionals should enhance their data safeguards immediately,” said Deputy State Treasurer Glenn White, head of Treasury’s Tax Administration Group. “Nationally, there has been a rise in cybercriminal thefts of taxpayer data from tax professionals. By reviewing internal controls, creating a data security plan and being cyber vigilant, tax professionals can take a stand against these criminals.”

So far this filing season, the Internal Revenue Service is reporting a steep upswing in the number of reported thefts of taxpayer data from tax practitioner offices. Across the nation, 75 firms have reported taxpayer data thefts in January and February, nearly a 60 percent increase from the same time last year.

Much of this increase follows one scam—the erroneous refund scheme—that affected thousands of taxpayers and numerous practitioners earlier this filing season.

January through April is the prime season for cybercriminals to attack tax practitioners, but data thefts can occur at any time. Tax professionals should be on high alert and implement strong security measures as the April 17 deadline approaches.

Cybercriminals try to take advantage of this extremely busy time of the year when tax professionals are in greater contact with taxpayers and are in possession of more data.

Signs that tax professionals may be a victim of data theft include:

  • Client e-filed returns begin to reject because returns with their Social Security numbers were already filed;
  • The number of returns filed with tax practitioner’s Electronic Filing Identification Number (EFIN) exceeds number of clients;
  • Clients who haven’t filed tax returns begin to receive authentication letters (5071C, 4883C, 5747C) from the IRS;
  • Network computers running slower than normal;
  • Computer cursors moving or changing numbers without touching the keyboard;
  • Network computers locking out tax practitioners.

Tax professionals who experience a security incident or a breach resulting in data disclosure should immediately report the incident to the Internal Revenue Service and Michigan Department of Treasury.

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