Identity Theft Protection: 4 Ways Scammers Steal Your Info (And How to Stop Them)
As a tax professional, I see identity theft cases come across my desk constantly. And here’s the frustrating part: People often come to us for help AFTER their identity has been compromised. And I wish we could do something for them at that point—but in most cases, the damage is already done.
The key is to be PROACTIVE about it. Don’t wait until someone drains your bank account. Don’t wait until you find out someone filed a tax return in your name. Always think ahead. What could possibly go wrong? There’s even a book about this—”Only the Paranoid Survive” by Andy Grove, the famous Intel CEO. And he’s right. The paranoid DO survive. Because they see problems coming and prepare for them.
According to the Federal Trade Commission, over 1.1 million Americans reported identity theft in 2024 alone. Experts say a new victim is created every 22 seconds in the United States. The U.S. has a population of about 340 million people. That means roughly 1 in 3 Americans—about 30%—have been victims of identity theft at some point in their lives. This isn’t some rare thing that happens to other people. This is happening to people you know. Right now.
In this guide, I’m going to show you the top 4 ways people can steal your identity—and more importantly, how you can protect yourself BEFORE it happens.
Table of Contents
- The Harsh Reality of Identity Theft
- Way #1: Phone Scams – The IRS Impersonation
- Way #2: Mail Theft and Physical Document Theft
- Way #3: Delayed Notifications – Missing Time-Sensitive Notices
- Way #4: Public Records Exposure – Your Address is Out There
- What I Personally Do to Protect Myself
- Even the IRS Deals With This Problem
- How Electronic Delivery Helps Our Clients
- Common Objections (And My Answers)
- Action Steps You Can Take This Week
The Harsh Reality of Identity Theft
People’s bank accounts get WIPED OUT because of this problem. Life savings. Gone. We spend enormous amounts of money protecting ourselves from small problems—security systems, insurance, warranties. But THIS? This is not a small problem. It’s affecting almost a THIRD of the population.
And trust me on this: Once the money is gone, it just never comes back. You can go to any government agency you want—I have yet to see them recover any money from this problem. The IRS won’t help you. The FBI won’t help you. Your bank might reverse some charges if you catch it fast enough, but your life savings? That’s gone. That’s why prevention is EVERYTHING.
My name is Dhirendra, co-founder of D2Tax. I’ve been doing tax planning and bookkeeping for over 15 years. And part of my job? Helping clients navigate the aftermath when their identity gets stolen. It’s a mess. It’s expensive. It’s time-consuming. And I don’t want that to happen to you.
A Real Story from Austin
Let me tell you about a friend of mine here in Austin. Smart guy. Runs his own business. Tech-savvy. Careful with his money. And he just lost $4,000 to a scam call. Four thousand dollars. Gone. In about 15 minutes. And before you think “that would never happen to me”—stick with me. Because that’s exactly what he thought too.
Way #1: Phone Scams - The IRS Impersonation
Let me tell you exactly how they got my friend.
Tuesday afternoon. He’s at his office here in Austin. Phone rings. Guy says he’s from the IRS. “Sir, there’s a major issue with your tax return. We’ve detected fraudulent activity. We need to resolve this immediately or there will be legal consequences.” Creates panic. Creates urgency. “Stay on the phone with me. I’m going to help you fix this right now.”
Why He Trusted It
Now here’s why it worked: The call came from a number that LOOKED like an IRS number. They had his full name. They had his address. They referenced his business. It felt legitimate. So he’s thinking, “Okay, this sounds real. I need to handle this.”
The Pressure Tactic
They kept him on the phone. Told him he couldn’t hang up or the case would escalate. Said if he didn’t comply, federal agents would be dispatched to his business. They’re good at this. They know how to create fear and urgency. They know how to make smart people make dumb decisions.
What They Asked For
They asked for account information. Social Security number. Details to “verify his identity and process the resolution.” And because they’d built all this pressure, all this urgency—he gave it to them.
By the time he realized it was a scam? They’d already drained his account. $4,000. Gone. And here’s the worst part: He called me AFTER it happened. And I had to tell him something he didn’t want to hear.
The Truth About How the IRS Communicates
Here’s what’s scary: The IRS will NEVER call you like that. They send letters. Physical letters. Or electronic notices if you’re set up for them. But scammers KNOW people get physical mail from the IRS. So they can pretend to be following up on that mail.
“Did you receive our letter about your tax debt?” You DID get a letter recently—might have been junk mail, might have been something else—and now you’re thinking, “Oh, maybe this IS real.” That’s how they get you.
How Going Paperless Protects You
If everything was electronic? If you KNEW every IRS communication comes through your secure portal? That phone call would be an immediate red flag. “IRS calling me? Nope. They only contact me through my portal. This is a scam. Goodbye.”
Going paperless makes scams easier to spot. And for people like my friend who trust the system? That extra layer of protection is critical. If he’d been set up electronically, he would have KNOWN the IRS only contacts him through his portal. That phone call would have been an instant red flag.
Way #2: Mail Theft and Physical Document Theft
Let’s talk about mail theft. Every piece of mail that comes to your house has information on it. Your name. Your address. Account numbers. Tax information. Business details.
Someone goes through your mailbox? Your trash? Your recycling bin? They’ve got everything they need. And I guarantee you, there’s probably a course out there: “Mailbox Mining 101: How to Turn Trash Into Cash”
Look, I’m not trying to scare you. I’m telling you this stuff happens EVERY DAY. Mail theft is one of the easiest ways for someone to steal your identity. And you won’t even know until it’s too late.
Electronic Delivery is Safer
Now compare that to electronic delivery:
- IRS notice? Comes to your email or secure portal.
- State tax correspondence? Electronic notification.
- Business documents? Secure online access.
Nobody’s digging through your mailbox. Nobody’s stealing paper with your information on it. Everything’s encrypted. Everything requires authentication to access. Much safer.
And bonus: Scammers can’t call you saying “we sent you a letter” when you KNOW everything comes electronically. Makes their job a lot harder. Good.
Way #3: Delayed Notifications - Missing Time-Sensitive Notices
Here’s one people don’t think about as identity theft, but it absolutely is: Timing. Whether you’re an individual taxpayer, a small business, or a mid-size corporation—nobody wants to get notified a week or two late. But that’s EXACTLY what happens with physical mail.
IRS sends you a notice on the 1st. It arrives at your house on the 5th. You’re on vacation. Or busy. Or the mail piles up. You finally see it on the 12th. That’s almost two weeks late.
The Consequences of Delays
And if that letter is time-sensitive? You might have already missed a deadline. Penalties might have already been added. The response window might have already closed. And then you’re calling the IRS like, “But I didn’t SEE the letter until—” IRS: “Not our problem. Penalty stands.”
Meanwhile, scammers are probably taking notes: “Ooh, delayed mail delivery—let’s add that to our playbook!”
Instant Notification with Electronic Delivery
With electronic delivery? IRS posts the notice. You get an email immediately. You’re in Europe? Pull it up on your phone. You’re at a conference? Check it on your laptop. You’re working in the field? Read it that night. You know about it as soon as they post it. Not a week later. Not two weeks later. Immediately.
And you KNOW it’s real because it’s in your secure portal, not some random phone call.
Access from Anywhere
And here’s what people love about this: You can access everything from wherever you are. Secure online portal. Login from anywhere in the world. Need to check an old notice? It’s there. Need to download a document? Click. Done. Need to respond to something? Handle it from your phone. You’re not tied to your physical mailbox anymore. You’re not waiting for pieces of paper to show up. You have access. Right now. From anywhere.
Way #4: Public Records Exposure - Your Address is Out There
Now let me talk about something else that’s related to protecting yourself: Privacy protection through registered agent services. And this is especially important for anyone who owns property.
Your Information is Public
Here’s the situation: If you own ANY property—your home, a rental property, commercial property, anything—your name and address are public record. Anyone can look you up. They can literally just type up your name on google and they have a list of all your assets. That’s scary how easy it is to do that.
Why This Matters
Now, why does that matter? Because there are over 50,000 lawyers in the United States. And I’m pretty sure THEY have business conferences too. “Personal Injury Profits: How to Find Deep Pockets” “Slip-and-Fall Goldmine: Advanced Property Owner Targeting”
Look, I’m not saying all lawyers are bad. But there ARE lawyers sitting there waiting for a small accident to happen. Someone slips on your property. Someone claims they got hurt. Kid falls on your sidewalk.
How They Target You
And what do these lawyers do? They start tracing the owner of the property. They look up public records. They find your home address. Now they know where you live. They know what else you own. And they use that information to come up with a plaintiff and extract money from you. They’re literally shopping for targets based on public property records.
Look, the aggressive lawyer part—I can’t get mad at them for doing their job. They have to make their money somehow. After all, they have a family to feed and bills to pay. I can’t blame them for doing their job. But it’s bad news for you if you own something that they can use to drag you into an expensive court settlement. That’s why it’s important for you to take some steps to make sure that if someone tries to look up who owns that home or rental property or a truck, they can’t find your name on it.
How Registered Agent Services Protect You
This is why smart property owners—whether you’re a landlord or just a homeowner—don’t use their primary residence address for everything.
When you use a registered agent service—like what we offer—they can’t easily track down where you actually live:
- All mail goes to the registered agent address, not your home
- Legal notices? Go to the agent
- Business correspondence? Goes to the agent
- Official documents? Goes to the agent
- Your personal home address? Not on public record
And if you REALLY want to protect yourself, you can even structure ownership through an LLC or trust to keep your name off public records entirely. But that’s a topic for another video.
The Cost vs. The Protection
The point is: Services like this don’t cost more than a couple hundred dollars a year. That’s it. $200-300 annually. But they sure do keep you away from much bigger problems.
Someone trying to sue you? They can’t find your home address. Someone trying to target you based on what you own? They hit a wall. They have to go through the registered agent, which creates distance and makes you a less attractive target.
That couple hundred dollars a year? Best insurance you can buy. Way cheaper than dealing with a lawsuit because someone found your address and decided you looked like a good payday. And now if you try to do anything to try to hide your name from public record—something you should have done before—it’s not going to work. Because they know you are the one who owns that asset and you are just trying to play cat and mouse.
Who Needs This Protection?
Now, you might be thinking, “Dhiren, I’m not a big real estate investor. I don’t own rental properties. Why do I care about this?” Here’s why:
If you own your home, you’re in public records. If you get mail from the IRS or state agencies, you’re vulnerable to scams. If sensitive information sits in your mailbox, you’re at risk for identity theft.
All the Benefits of Going Paperless
Going paperless protects you in multiple ways:
- Security — No physical documents with your info sitting in mailboxes or trash cans
- Timing — You know about important notices immediately, not days or weeks later
- Privacy — For property owners, registered agent services keep your personal information private
- Access — Everything’s available from anywhere, anytime
- Scam Protection — You KNOW how government agencies contact you, making fake calls obvious
This isn’t just for big corporations or real estate moguls. This is for anyone who:
- Files taxes
- Owns property (even just your home)
- Gets government correspondence
- Wants to protect their family from scams
- If you ever opened an LLC you have to have one per state law
If my friend had been set up electronically, that phone call would have been an instant red flag. Instead, it cost him $4,000. Four thousand dollars because he didn’t know how the IRS actually communicates.
What I Personally Do to Protect Myself
Now let me tell you what I PERSONALLY do to protect myself. Because I practice what I preach. These are the actual steps I take every single day.
Strategy #1: Everything Electronic
First: I keep everything electronic. Every notice. Every statement. Every document. If it can be delivered electronically, that’s how I receive it. No physical mail with my account information sitting in a mailbox.
Strategy #2: Limit Checking Account Balance
Second: I never keep more than $10,000 in any checking account. Ever. Why? Because checking accounts are the most vulnerable. That’s where debit cards are linked. That’s where scammers go first. If they get access to my checking account, the damage is limited to $10,000 max.
Strategy #3: Savings Account Isolation
Third: All my savings are in accounts that I DON’T have a checkbook from. No debit card. None. The ONLY way I can access that money is to go online and make a transfer. And that requires two-factor authentication on my cell phone. Not email—cell phone only. Email can be hacked. My phone? That’s in my pocket.
Strategy #4: Use Certificates of Deposit
Fourth: If I have money I don’t need to touch for a while, I put it in a CD. Certificate of Deposit. Why? Because while it’s sitting there earning interest, it usually CANNOT be accessed. It’s locked. Even if a scammer somehow got into my accounts, they can’t touch money in a CD. It’s safe from this type of fraud. And it’s earning me interest while it’s protected.
Strategy #5: Never Use Debit Cards
Fifth: I NEVER use debit cards. And I especially never access ATMs from shady places—only banking centers. In fact, I don’t even carry debit cards on me. Nowhere in the world. Why? Because a debit card is linked directly to your bank account. Someone steals it? They’re pulling money straight out of your account.
Strategy #6: Credit Cards Only
Instead, I use credit cards. Always. Credit cards can protect you from scammers. If someone makes a fraudulent charge on your credit card, you dispute it. The credit card company investigates. You’re not liable. The money never left YOUR account—it left THEIR account. With a debit card? That money is GONE from your account immediately. And good luck getting it back.
Why This Works
These aren’t complicated strategies. These are simple, practical steps that make it exponentially harder for someone to steal from me. And if they somehow DO get through one layer, the damage is limited. I’ve compartmentalized everything. That’s how you protect yourself.
Even the IRS Deals With This Problem
And let me tell you how serious this problem is: Even the IRS has to protect against this.
I buy pieces of real estate every year. The money I make from my active businesses, I plow them into income-producing real estate. Now, with the amount of purchases I’ve done and the amount of income it’s going to offset, I KNOW the offset will pretty much wipe out any taxable income. So all the money I’m paying in estimated taxes? It’s coming back. With interest.
But here’s the thing: We’re busy at the beginning of the year. It’s easier to just pay them and move on with the business. It’s the safest option. I don’t want to pay any extra penalties or interest just because I paid my estimated tax a little late. So that’s what I do. Come January 15th, I’ll do that again. Pay the estimate, even though I know I’ll get it back.
Multiple Layers of IRS Verification
But when it comes time to get that overpayment back from the IRS? They follow a very safe and secure method. They send you a PIN—a special code—which you then have to go enter in your online account. And then they ALSO cross-verify additional information just to make sure no one filed a fraudulent claim on your behalf and is requesting money back. They have this entire process in place. Which tells us: This is a NIGHTMARE problem for them too. But they have to handle it the safest way possible.
So much so that when tax preparers in my firm try to file my return, the IRS requires me to give them a special code—without which they will NOT accept that return. There are layers and layers of protection. Most tax preparers don’t even encounter this in their entire career. But we see all kinds of situations in front of us. This is how bad the identity theft problem has gotten. Even the IRS—with all their resources, all their technology—has to build multiple layers of verification just to protect people from fraudulent tax refund claims.
How Electronic Delivery Helps Our Clients
And let me tell you something else that comes up more frequently—and how having everything electronic helps.
After we file our clients’ taxes and the IRS accepts them, there are often some clients that end up owing a small amount more than what we calculated. Let me tell you why that happens:
- Client forgot to turn in an interest payment 1099
- Or an extra job they worked for a few weeks—didn’t give us the W-2
- Or some company fell behind and never issued them the 1099
- Or they paid their estimated tax, but the timing of it was such that they shortchanged the IRS and now they owe some money
The Electronic Advantage
Well, in their case, they just get notified by the IRS via email. They log in to their account. They see exactly what they owe. They pay the small fee. And they move on with their life. Our clients know this. If this happens, they know what to do and what to expect. Everything goes as planned.
In other words: We avoid any surprises. No envelope showing up three months later with penalties already added. No “we sent you a letter” that got lost in the mail. Just a simple email notification. Log in. Pay. Done.
Common Objections (And My Answers)
“But Dhiren, what if I miss an email notification?”
Set up alerts. Flag important senders. Check your secure portal regularly. You know what’s easier to miss? A piece of paper buried in a pile of junk mail. Or better yet—a scammer pretending to follow up on that piece of mail you never saw.
“Isn’t electronic delivery less secure?”
Are you serious?
- Electronic: Encrypted, requires authentication, leaves an audit trail
- Physical mail: Anyone can open your mailbox. Scammers can call claiming to be the IRS.
Which sounds more secure to you?
“I like having physical copies.”
Great. Download them. Print them if you want. But get the NOTIFICATION electronically first. Then you can decide what to print. And you’ll KNOW it’s real because it came through your secure portal.
“Registered agent services sound expensive.”
Couple hundred dollars a year. That’s it. Know what’s expensive? A lawsuit because someone found your home address in public records and decided you looked profitable. The cost of the service is nothing compared to what it protects you from.
Action Steps You Can Take This Week
Here’s your homework:
Step 1: Set Up Electronic Delivery for the IRS
Go to IRS.gov. Create an online account. Turn on electronic notifications. Takes 10 minutes.
Step 2: Do the Same for Your State Tax Agency
Most states have online portals now. Sign up. Get alerts.
Step 3: Consider a Registered Agent Service
If you own ANY real estate, especially if your home address is currently on public record. Couple hundred dollars a year for privacy protection? Worth it.
Step 4: Review Other Physical Mail
Bank statements? Go paperless. Credit card statements? Electronic delivery. Business correspondence? Secure portal. The less sensitive information sitting in physical mailboxes, the better.
FAQ
How do I know if a call from the IRS is legitimate? The IRS will NEVER call you about urgent tax issues, threats of arrest, or demand immediate payment. They communicate through official letters or through your secure online portal if you’re set up electronically. Any phone call claiming to be from the IRS asking for payment or personal information is a scam.
What’s the safest way to receive IRS notifications? Set up electronic delivery through IRS.gov. Create an online account and turn on electronic notifications. This way, you’ll receive instant email alerts when the IRS posts something to your secure portal, and you’ll know exactly how they communicate with you—making scam calls immediately obvious.
How does a registered agent service protect my privacy? When you use a registered agent service, all official mail and legal notices go to the agent’s address instead of your home. This keeps your personal address off public records, making it much harder for lawyers or scammers to find where you actually live or target you based on your property ownership.
Why shouldn’t I use debit cards? Debit cards are linked directly to your bank account. If someone steals your debit card or gets your information, they can drain money directly from your account. With credit cards, fraudulent charges can be disputed and the money never leaves your account—it’s the credit card company’s money at risk, not yours.
What should I do if I’ve already given information to a scammer? Contact your bank immediately to freeze accounts and dispute charges. File a report with the FTC at IdentityTheft.gov. Contact the IRS Identity Protection Specialized Unit. Change all passwords and enable two-factor authentication. The faster you act, the better chance you have of limiting the damage.
How much money should I keep in my checking account? Never keep more than you’re comfortable losing in a checking account. A good rule of thumb is $10,000 maximum. Keep larger amounts in savings accounts without debit card access, requiring online transfer with two-factor authentication, or in CDs that can’t be accessed immediately.
Is going paperless really more secure than physical mail? Yes. Electronic delivery is encrypted, requires authentication to access, and leaves an audit trail. Physical mail can be stolen from your mailbox, lost, or used by scammers to create convincing follow-up scam calls. Electronic delivery also provides instant notifications so you never miss time-sensitive notices.
Look, my friend here in Austin learned this lesson the hard way. $4,000 gone because a scammer was better at their job than he was at protecting himself. And this is a smart guy. Business owner. Careful with money. And they STILL got him.
And the thing is: Scammers are getting BETTER. They’re professionalizing. They’re sharing strategies. For all we know, they’re holding webinars: “Cold Calling Mastery: IRS Edition”
We don’t know what their next move is. But we CAN do the obvious things to protect ourselves. Go paperless—whether you’re filing taxes, getting bank statements, or dealing with government agencies. Use registered agents if you own property—even just your home. Keep your information secure.
Don’t make it easy for scammers to target you. Don’t make it easy for lawyers to find your home address. These protections cost almost nothing compared to what they save you from.
We offer all of this at D2Tax—registered agent services, tax planning, asset protection strategies—for individuals, families, and businesses. Free 30-minute consultation. Link below.
I’m Dhirendra. This is D2Tax. Protect yourself and your family. Don’t let what happened to my friend happen to you. $4,000 is a lot of money to lose in 15 minutes.