Tax ID numbers are issued to individuals as Social Security numbers and to businesses as Employer Identification numbers. Individual Taxpayer Identification numbers are assigned to people who are required to have a Tax ID, but either don't have a Social Security number or are not eligible for one. An identity thief that steals or buys your personal or business Tax ID number can use the information to access accounts, create duplicate credit cards, apply for loans and make fraudulent purchases in your name.
The Risks of Giving out your Tax ID Number
Tax ID numbers are vulnerable to theft in numerous ways, including being hacked from a computer network. They can also fall into the wrong hands when organizations that are entrusted with them either don't protect them or handle them carelessly. For example, the Fifth Annual Study on Medical Identity Theft from the Medical Identity Fraud Alliance revealed that the number of identity thefts from doctor's offices, hospitals, and medical practices increased by half a million victims in 2014 vs. 2013. The risks to the people who are victims of identity theft -- including those whose tax ID numbers have been swiped -- include unauthorized access to bank accounts, illicit withdrawals and expenditures and fictitious insurance accounts used to obtain fraudulent prescriptions and services.
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The Value of a Stolen Tax ID Numbers on the Black Market
Tax ID numbers, combined with other forms of personal data, are worth more on the black market than stolen credit card information because tax ID information can be used repeatedly to file insurance claims, apply for loans and open new credit card accounts. Stolen credit card numbers, on the other hand, become valueless after they are closed by issuer. The ability to keep using tax ID numbers and other personal information makes these types of data 10 to 20 times more valuable than credit card numbers on the black market, which makes them a priority target for hackers and identity thieves.
Protecting your Tax ID Number
The first step in protecting your tax ID number is to give it out only when necessary and then only after the need for it is fully explained. Think of it as a numbers game where the odds of having your identity stolen increase every time you give your Tax ID number to someone, put it on a form, or complete an application for credit. Never give your Tax ID number in response to a request in an email. These requests are usually designed to appear like they have been sent by a financial institution to update files, including Tax ID numbers. Referred to as phishing, the scam is another way for identity thieves to gain access to valuable personal or business data.
Legalities of Identity Theft
Using stolen personal information, including Tax ID numbers, for illicit purposes is a felony under federal law, with maximum prison terms of 15 years. Identity theft cases, according to the Department of Justice, can include additional felonies such as credit card, wire and mail fraud, some of which have maximum prison terms of up to 30 years. Identity theft laws are enforced at the state level as well. These laws vary between each state in terms of the definition of victims, punishment, types of fraudulent activities and restitution. If you suspect you are a victim of identity theft, contact the appropriate law enforcement authority in your state as soon as possible to find out what you can do to contain the potential damage.