Pension Department president and administrator Brett Goldstein says Americans can expect to see more cases of identity theft as the Department of Labor goes paperless and relies more on online transmission of tax information.
As of January 1, 2010 the DOL required companies that provided their employees with 401(k) and pension plans to file Form 5500 electronically with the agency. However, businesses were prohibited from outsourcing the tax filing to pension professionals. As of late, the agency has reversed their decision and now allows outside businesses to complete the required information for their business clients, putting the tax information of millions of employees in the hands of business owners because their signatures will be posted online.
"Unfortunately, the leniency that the Department of Labor is showing will lead to higher rates of identity theft," Goldstein said. "In order for pension professionals to file Form 5500 for their clients, clients will have to sign a paper version of the 5500, which will then be posted on the internet for anyone to see. Anyone looking to steal your identity will be able to access your signature and tax ID on the Department of Labor website."
In order to electronically file the form, the Labor Department will provide business owners with a password and ID. For privacy reasons, Labor officials say that the passwords will be secure and protected. However, Goldstein points out a conundrum with this policy that may not prevent criminals from stealing a person's identity.
"On one hand the Department of Labor wants to protect people by forbidding them to share their ID numbers and passwords. Yet on the other hand, they have no problems with posting your signature and tax ID number online for anyone to see. Disgruntled employees with access to the boss's signature can forge the boss's name on a business check and empty the business bank account," Goldstein said.
Businesses have come under fire lately for lax protections on employees personal information. One news station went dumpster diving behind a business complex that housed a medical office and a number of real estate and tax companies, finding significant amounts of employee and patient information. In one of those business complex trash bins, the news team came across an entire box of old tax files, containing names, Social Security numbers and bank account information of employees.