Tax Season and Identity Theft: How Improper Document Disposal Leads to Fraud

Tax season increases the volume of highly sensitive documents moving through your business, and unfortunately, it also increases the risk of identity theft.

W-2s, 1099s, payroll reports, and draft tax returns contain confidential financial and personal data. If these documents are improperly discarded, they can quickly become tools for fraud.

Secure destruction is not optional — it’s a critical part of compliance and risk management.

W-2 Theft: High-Value Target for Criminals

W-2 forms contain names, Social Security numbers, income details, and employer information — everything needed to file fraudulent tax returns or commit identity theft.

When these documents are thrown away without secure shredding, they become easy targets. Employers may face reputational damage, regulatory scrutiny, and potential liability if employee information is exposed.

1099 Exposure & Contractor Risk

1099 forms often include Taxpayer Identification Numbers and payment details. Improper disposal can lead to fraudulent filings or financial manipulation.

Businesses are responsible for safeguarding contractor data just as they are employee records.

EIN Misuse and Business Identity Theft

Employer Identification Numbers (EINs) are increasingly targeted. If exposed through discarded tax documents, criminals may:

File fraudulent business tax returns
Open unauthorized credit accounts
Apply for loans under your company’s name

Business identity theft can take months to detect and even longer to resolve.

The Compliance Risk

Improper document disposal during tax season may also violate regulations such as:

HIPAA
GLBA
FACTA Disposal Rule
State data protection laws

Compliance requires more than record retention. It requires secure, documented destruction when records are no longer needed.

Why Secure Shredding Matters

A NAID AAA Certified shredding provider ensures:

- - Secure chain of custody
Background-checked personnel
Secure transportation and destruction
Third-party audited processes
Certificate of Destruction documentation

This protects employees, contractors, and the business itself, while demonstrating due diligence.

Tax season identity theft often begins with something simple: improper document disposal.

By partnering with a certified shredding provider like Shred America and implementing a compliant destruction policy, businesses reduce fraud risk, protect sensitive information, and strengthen their overall security posture.

Tax season isn’t just about filing correctly, it’s about protecting the data behind every return.

Shred America has high security mobile shredding trucks that can come to you, or you can use our interactive map to find one of many secure drop-off locations around the country.

In any case, feel free to contact Shred America to fulfill any of your paper or electronic destruction needs today.

Tax Season and Identity Theft: How Improper Document Disposal Leads to Fraud