As tax season looms, many people across North America are sorting through receipts, organizing employee forms, and connecting with accountants. It’s crucial to handle all tax-related papers securely during the filing process and once you’re finished with them — improper handling can actually result in tax-related identity theft.
Tax-related identity theft occurs when a third party illegally uses deception, misrepresentation, and other fraudulent means to defraud an individual (and the government) of money by falsely claiming a tax return in their name.
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Tax Fraud
Tax fraud is different from tax-related identity theft. Tax fraud refers to criminals connecting with members of the public, claiming to be from the IRS or the CRA, in order to obtain personal information for illegal use, like opening bank accounts. In 2019, it was reported that over 2.4 million people in the US had been targeted by IRS impersonators, with over 14,700 victims losing a total of $72.8 million.
Indicators of Tax-Related Identity Theft
Concerningly, individuals may not know that they’ve been a victim of tax-related identity theft until:
- They themselves go to file their taxes, and they find it’s already been done using their Social Insurance Number or Social Security Number.
- They discover that more than one tax return has been filed using their personal social number.
- They find that there’s an unknown employer listed on their tax refund.
- Or, they receive notice that they owe taxes, that they’ve had their tax refund reduced, or there’s a collection action in their name for unfiled taxes.
Keeping your documents safe and secure during tax season and following your filing is one smart step towards keeping yourself protected against tax-related identity theft and tax fraud.
Shred Your Income Tax Documents
Following filing, store papers securely. If you filed online, make sure that your computer is password protected.
When the time comes to destroy your papers, shredding is the best option, such as with professional services offered by companies like Absolute Destruction. Here, a team of bonded service representatives come to your home — or place of business — and securely shred any sensitive papers on-site, providing a certificate of destruction once the job is complete. Getting your papers professionally shredded is the most secure option for all delicate documents — including income tax papers.
How Long Should You Keep Tax Papers?
This varies based on location. In Canada, you’re legally required to keep your tax papers for six years. If you plan on leaving the country (for example) and want to destroy tax returns and their supporting papers before the six years lapse, you must ask for written permission from the CRA.
In the US, the period that you hold on to tax papers will vary based on specifics, with the timeframe being between three to seven years as per the IRS.
Take Away
Even old tax paperwork leaves ample opportunity for ruthless thieves. By keeping your papers safe and secure during the required hold periods, and then shredding these papers once the hold time has elapsed, you’re saving yourself from tax-related identity theft and many-a-headache later down the line.