If you have a tax bill you haven’t paid – be aware your tax file number may have been given out to debt collectors contracted by the Australian Tax Office. This is despite the recent warnings from the ATO that compromised tax file numbers are leading to identity theft. We look at the story behind this recent revelation and report on the prevalence of tax file number – related identity crime. Identity theft can lead to credit fraud which can leave you in debt and with bad credit history.

By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

The Herald Sun reported yesterday in their story ‘Debt collection agents given tax file numbersthat the ATO gives out the tax file numbers of consumers whose debt they are referring to debt collection agencies. The numbers are used for identification purposes.

“THE tax file numbers of Australians are being passed on to contracted third-party debt collection agencies by the Australian Tax Office, despite the ATO claiming compromised tax file numbers are leading to identity theft,” the lead in states.

This surprising revelation comes after the Herald Sun revealed this month there had been a surge in compromised tax file numbers. See last week’s post ‘Over 23,000 accounts of tax file number identity theft last year.’

The newspaper published data from the Australian Taxation Office showing over 23,300 Australians had their tax file number compromised in the 2012 financial year. This was up from 22,000 last year.

Likewise, ATO’s August campaign involved urging consumers to keep their tax file numbers safe to avoid identity theft. They revealed that scams such as fake job ads and bogus ATO emails were leading to compromised tax file numbers and identity theft. Here is an excerpt from their media release ‘Scammers target job seekers’ with comment from Tax Commissioner Michael D’Ascenzo:

“Personal information can be used by scammers to lodge false tax returns in your name, enable the use of your credit cards or even result in people taking out a loan in your name. In some cases, identity crime can take years to resolve.”

This year there have been over 6,000 reports from the community about bogus e-mails using the ATO brand, and over 4,000 reports of attempted phone scams.

At this time of year when many people expect refunds, scammers use the opportunity to pretend to be from the ATO.”
Only certain people and organisations can ask for your TFN, the most common being:

• the ATO, when discussing your tax records
• your employer, but only after you start work
• your bank or other financial institutions
• Centrelink, and
• your superannuation fund.

It was not mentioned which people and organisations are commonly recipients of Australian tax file numbers.

ATO response on tax file number referral

The ATO told the Herald Sun that contractors use the numbers for identification purposes only and said there is no risk because strict security requirements are placed on them.

Here is an excerpt from the Herald Sun story:

Four companies are contracted to do debt collection for the ATO and only two responded to queries from the Herald Sun asking about security arrangements or how many staff would have access to public tax file numbers.

The ATO stated: “The four debt collection agencies we use are subject to strict security and privacy provisions as part of their contract. Any breach could nullify the contract and result in prosecution.

“No taxpayer information, including tax file numbers, is to be sent overseas.”

The ATO added that every two years it checked the premises and IT systems of third-party debt collection companies, and the last checks were done between July and October this year with no major risks or breaches identified.

But the country’s biggest accountancy body has expressed concerns about the use of tax file numbers when not necessary.

“If the tax office is sharing TFNs with third parties, regardless of the contractual arrangement, then there is a concern and a great risk … that the information is distributed, that the information could be misused somewhere along the line,” CPA Australia head of tax Paul Drum said.

“In that regard, it seems unusual that the Tax Office would need to provide a TFN when the information provided to the debt collectors includes a claims reference number anyway.”

Whilst the security checks employed by the ATO seem acceptable, I too question the requirement for sharing of this crucial financial information to outside bodies if not absolutely necessary.

In this day and age when instances of identity fraud are reportedly on the rise, and becoming more sophisticated by the day; when we are urged by Government, by law enforcement, by banks, even by the ATO to regard our personal information as a valuable commodity – it seems unusual that the policy for sharing this crucial financial information still remains in place.

Identity crime and your credit file

Compromised personal information in any form is a big threat to our credit file health.

If fraudsters get hold of your identity information they can duplicate it, and attempt to take credit out in your name. If successful, they can borrow anything from credit cards, mobile phones, cars, even mortgage properties. They are never so kind as to pay that debt back – so your credit file, your good name is left compromised and you are left with debt you didn’t initiate.

It can be difficult to correct any credit file discrepancy – but identity crime can be even more difficult to remove from your credit history – because you have to prove – somehow – that you didn’t initiate the credit in the first place. This can involve evidence that you may or may not have. You may not be able to get any documentation, and also the identity theft could have occurred long before you find out about it.

If you find out any personal information is compromised, or you know you are the victim of identity theft, the best place to go first if the Police.

Once you are in a position to try to recover your good credit history, a Police report will go a long way to proving your innocence.

Police may also advise you of other avenues open to you as well as an identity theft victim, such as requesting a Victims of Commonwealth Identity Crime Certificate.

If you need help recovering your credit file health for whatever reason, contact a Credit Repair Advisor on 1300 667 218 or for more information visit the MyCRA Credit Rating Repairs website www.mycra.com.au.

Image: Arvind Balaraman/ www.FreeDigitalPhotos.net