What You As a Taxpayer Must Know in the aftermath of the IRS data breach – Part 2

View this email in your browser

Federal law provides for statutory damages which may be available to impacted taxpayers. Section 7431 of the Internal Revenue Code provides that “taxpayer may bring a civil action for damages against the United States in a district court.” Section 7431 further provides that recoverable damages are limited to $1,000 “for each act of unauthorized inspection or disclosure of return or return information,” plus litigation costs, unless the taxpayer can demonstrate that they sustained actual damages more than the proscribed limit because of the unauthorized act or acts. This general statutory cap on damages will likely discourage many affected taxpayers from initiating a lawsuit. Federal law provides for statutory damages which may be available to impacted taxpayers. Section 7431 of the Internal Revenue Code provides that “taxpayer may bring a civil action for damages against the United States in a district court.” Section 7431 further provides that recoverable damages are limited to $1,000 “for each act of unauthorized inspection or disclosure of return or return information,” plus litigation costs, unless the taxpayer can demonstrate that they sustained actual damages more than the proscribed limit because of the unauthorized act or acts. This general statutory cap on damages will likely discourage many affected taxpayers from initiating a lawsuit.

Nine Tips to Proactively Protect Your Information

In the case of the Littlejohn Breach, individual taxpayers could do little to protect their information from unauthorized disclosure. There are many proactive ways to guard your identity and personal information, however, and implementing these protections can help ensure that risks from unauthorized activity or disclosure are identified, and mitigated, promptly.

1. Review your IRS tax transcript and credit report on an annual basis.
2. Consider applying for an Identity Protection PIN, which is required to file your tax return and will change on an annual basis.
3. Inquire about your tax preparer’s data security and controls.
4. If you send documents electronically that contain sensitive tax information, such as your social security number of employer identification number, to your advisors, tax preparer, or others, do so on a password protected basis (conveying the password in a separate phone call) or using a peer-to-peer file transfer application.
5. Encrypt all tax records saved to your computer and cloud-based storage systems.
6. Consider insuring against identity theft.
7. Use strong and unique passwords, as well as multi-factor or two-factor authentication for all online financial accounts or online accounts that contain your financial, personal identifying, or other sensitive information.
8. Recognize and be aware of new phishing emails, and phone call and text message scams.
9. Monitor your digital footprint by periodically searching for yourself online. Report and close any fake or imitation accounts, set alerts to notify you when settings or personal information in your online accounts are changed, and ensure that tighter privacy settings (including restricting permissions) are utilized online and for mobile apps.

Richard Freiberg
Profitability Consultant
Richard Freiberg CPA PC
Phone (980)339-3352
Cell (914)393-0033
www.rmfreibergcpa.com
LinkedIn
to subscribe to Cyber Insights Today
to subscribe to LinkedIn Newsletter Cyber Security

Providing valuable counsel to help boost your company’s bottom line, while navigating competitive forces, industry, and economic risks in today’s challenging environment
 
 

Copyright © 2024 Richard Freiberg CPA PC, All rights reserved.

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.