Providing Employee Financial Education on a Timely Topic
Financial wellness means different things to different people because it encompasses countless aspects of money management, not the least of which is tax circumstances. While many employees understand that income taxes play a significant role in their financial lives, less are aware of the threats that tax season brings. The IRS in partnership with the Federal Trade Commission and other consumer advocacy groups have dedicated an entire week to one often overlooked danger related to taxes – tax identity theft.
From January 29 through February 2, 2018, many organizations are increasing awareness about tax identity theft and its potential to derail one’s overall financial wellness. Through a series of webinars, interactive Twitter chats, and printable educational materials, anyone can easily participate in the initiative. For employers with financial wellness programs, Tax Identity Theft Awareness Week is a prime opportunity to engage with employees about a topic that is both timely and beneficial to their level of financial well-being.
What is Tax-Related ID Theft?
Before haphazardly distributing materials or inviting employees to webinars, it’s smart to have an understanding of what tax-related identity theft truly is. According to the FTC, identity theft related to taxes is the unfortunate event that occurs when an individual’s social security number is used to either file a tax return and ultimately receive a tax refund in that person’s name, or to secure a job under another person’s social security number. In the first case of tax identity theft, when the correct person goes to file their return and receive their refund, the IRS informs them they have already filed for that year, so no refund is immediately given.
With instances of the latter case of tax identity theft, the employer reports income to the IRS using the victim’s social security number, but for a different person. Because those earnings weren’t truly received by the person impacted, IRS records show a failure to report all income and a bill is generated for any income tax not paid on those earnings.
In either case of tax identity fraud, the person whose social security number was used to create an inaccurate record of filing or earnings faces a slew of negative consequences. Most pressing is the fact that the victim’s social security number has been compromised, giving bad actors a way to establish other accounts in the individual’s name. This could drastically impact a person’s financial wellness by dragging down their credit report and score in a short period. Also, tax identity theft victims may be overwhelmed by the correspondence sent by the IRS requesting payment or informing them a return has already been filed. They may need to take time away from work to correct the fraud, causing stress and reduced morale.
Fortunately, there are methods to manage tax-related identity theft once it takes place and strategies for reducing risk in the first place.
Steps to Correct Tax ID Theft
Anyone who has experienced tax identity theft is not alone in the process of remedying the situation. The FTC suggests that victims follow the steps below to get started:
File a complaint with the FTC here
Close any account related to the theft
Additionally, the IRS has some guidance for those impacted by tax identity theft, which includes:
Responding to all IRS notices by calling the phone number provided
Complete the IRS Identity Theft Affidavit Form
Pay taxes due as normal, but consider doing so via paper forms
Reducing Employees’ Risk Through Engagement
During Tax Identity Theft Awareness Week, employers have an opportunity to share information about reducing one’s risk of falling victim to tax identity theft in several ways. First, including details about the week’s activities led by the FTC and encouraging participation are the simplest steps an employer can take to join in on the awareness campaign. Next, offering guidance on the warnings signs of tax-related identity theft as well as methods used by criminals to gather the personal details necessary to conduct tax identity theft is beneficial to employees. For instance, receiving and answering a questionable text, phone call, or email about a tax issue almost always leads to a tax identity theft attempt, given that the IRS does not communicate with taxpayers except via mail.
The good news is that employers can help employees be champions of their own financial wellness by offering simple, actionable information regarding Tax Identity Theft Awareness Week. In doing so, companies benefit from a more financially stable group of workers who can focus their energy on the job at hand, instead of dealing with the aftermath of tax identity theft.