Data Protection and Identity Theft Flashcards
Why are tax professionals targets for cybercriminals?
Cybercriminals seek to steal client data to file fraudulent tax returns
They use tactics like phishing emails, fake calls, and malware.
What is the Safeguards Rule?
FTC regulation requiring tax preparers to develop written security plans
It falls under FTC 16 CFR Part 314.
What does the Privacy Rule require from tax preparers?
To provide privacy notices and limit sharing of customer information
This is part of FTC 16 CFR Part 313.
List three best practices for data security that all tax preparers should follow.
- Assign responsibility for data security
- Assess risks to client information
- Write and implement a security plan
What are the IRS e-file security standards?
- Use Secure Socket Layer (SSL) certificates
- Conduct weekly vulnerability scans
- Maintain written privacy policies
- Protect against bulk filing fraud
- Register public domain names in the U.S.
- Report security incidents immediately
What is tax-related identity theft?
When someone uses stolen personal or business information to file fraudulent returns
This includes using Social Security or Employer Identification Numbers (EINs).
Name two warning signs of tax-related identity theft for individuals.
- Multiple tax returns filed under the same SSN
- IRS notices about wages or accounts from unknown sources
What should businesses look for as warning signs of identity theft?
- IRS notices about false employees or dormant businesses
- Fraudulent credit or account activities
Fill in the blank: The IRS does not contact taxpayers via ______, text, or social media for personal information.
What steps should be taken if identity theft occurs?
- File a complaint with the FTC at identitytheft.gov
- Contact banks to secure compromised accounts
- Notify the IRS using Form 14039
- Monitor credit reports and place fraud alerts
What is business identity theft?
Unauthorized use of a business’s information to gain tax or financial benefits
List two indicators of business identity theft.
- IRS notices about fictitious employees or activities
- Fraudulent amendments to tax returns
What protective measures should be taken against business identity theft?
- Respond promptly to IRS notices
- File police and FTC reports
- Monitor credit reports and account activity
- Update computer security software
True or False: Tax preparers are not required to assess risks to client information.
False
What is the purpose of using encryption in data security?
To protect sensitive information from unauthorized access
