Step aside tax evaders, the IRS has a new criminal in their crosshairs: tax scammers and identity thieves. Don’t think it will happen to you or your clients – or to you? Think again. As of this March 2016, the IRS reported identifying 42,148 tax returns with $227 million claimed in fraudulent refunds and prevented the issuance of $180.6 million (79.6%) in fraudulent refunds. Newsweek estimates that tax scammers have been able to scam about $6 billion a year from the IRS.
How does it happen? One of two ways:
- A scammer accesses a taxpayer’s information through hacking, having someone on the inside of an organization with access to social security numbers, or by purchasing the information on the darknet.
- A scammer contacts a taxpayer and convinces them to give up personal or financial information.
Stolen Identity Refund Fraud (also known as SIRF) is a real problem. It has become a very popular crime that ranges from solo scammers to networks of people who steal information and then file fraudulent returns. Scammers steal personal information from hospitals, nursing homes banks, etc. Sometimes they hack into personal or company computers, and sometimes they have an informant inside and organization with access to information like names, social security numbers and addresses. They also run lots of scams that involve contacting a taxpayers in some form and getting them to divulge crucial information – or pay them money.
From there, they take the information they’ve gathered and file bogus tax returns. The refunds are sent to mailboxes or debit cards controlled by the scammers and it’s all done very early on in the tax season before the real taxpayer gets around to filing.
There are lots of scams out there right now that your clients should know about! We’ve rounded up the most popular ones. Be sure to share this information with clients, family, and friends so that they know.
Tax Scam Round-up
We add to this list as we learn about new scams so you always have a place to go for resources.
Certified Letter Scam (added 6/27/17)
This is an old scam with a new twist. The criminal calls you and claims to be an IRS employee. They tell their victim that they owe money and that they have already sent two certified letters to their home but the letters have come back undeliverable. They demand that payment is made immediately by prepaid debit card and claim the prepaid card is linked to the EFTPS (Electronic Federal Tax Payer System). The victim is also warned not to contact their tax preparer, an attorney, or the local IRS office until after the payment is made and also threaten arrest.
Tax Software Scam (added 2/21/17)
The IRS is warning tax preparers about a new phishing scam that appears as if it’s from their tax software provider. The email subject line is usually “Access Locked”, something that usually gets the tax preparer’s attention right away. The email warns that their access has been suspended due to security issues and prompts preparers to use the “unlock” link that takes the preparer to a fraudulent page and prompts them to enter their login credentials
Read the article from Accounting Today with information on what to do if you receive this email.
Quickbooks Phishing Scam (added 1/26/17)
The Better Business Bureau Northwest is warning users of Quickbooks accounting software of a new phishing scam. According to Accounting Today, “Victims receive an email in their inbox with the subject line, “QuickBooks Support: Change Request.” The email claims to be a confirmation from Intuit that a business has changed its name and contains a hyperlink that the recipient can click on to cancel the request. However, if email recipients click on the link, it directs them to a site that downloads malware to their device.”
e-Services Email Scam (added 11/16)
This one is for tax professionals who use IRS e-services to beware of an email asking them to update their accounts and directing them to a fake website.
The subject line for the fraudulent email is “Security Awareness for Tax Professionals.” The “From” line is “Your e-Services Team.” It has both an IRS logo and an e-services logo that hyperlinks to a URL verified as a phishing site. The spoofing site poses as an e-services registration page.
The scammers are attempting to exploit current IRS efforts to strengthen the e-services authentication process and its ongoing communications with tax professionals about their accounts. Scammers are attempting to steal e-services usernames and passwords or additional personal data through a registration page.
More information about this scam can be found on the IRS Website.
Impersonating an IRS Agent
One of the most popular ways to get information from a taxpayer is by impersonating an IRS agent. This usually happens via phone but can also be through email or letter. The scammer will tell you that you owe the IRS money and ask for immediate payment over the phone. Scammers have asked for payments via credit card, Western Union, MoneyGram, bank wire transfers, bank deposits made into another person’s account, on iTunes Gift Cards, Green Dot Prepaid Cards, MoneyPak Prepaid Cards, Reloadit Prepaid Debit Cards, and other prepaid credit cards.
The scammers are always very pushy and use threats to scare people into paying them money. They can even alter what can appear on your caller ID so that the number looks legitimate. It’s important to know that the IRS doesn’t usually call taxpayers and if they do call, they will never ask for payment of any kind over the phone.
Bogus Student Tax
This scam also comes in the form of a phone call demanding payment for a non-existent tax that they call the “federal student tax.” They demand payment through wire transfer and when you don’t comply, they will threaten to call the police.
Orlando Tragedy Scam
This was draws on the recent shooting in Orlando. It’s so sad that people find ways to take advantage of others who are just looking to help out after such a terrible tragedy. These schemes can come by way of phone, email, social media, or in-person solicitation of funds to fake charities. Make sure you only donate to known charities. If you are unsure, you can check out charitynavigator.org or irs.gov for the charity’s name.
Other Phone Scams
Scammers don’t just impersonate IRS agents, they will impersonate any entity to try and gain taxpayer information or payment. Here’s a list of other schemes that have been pulled.
- Soliciting W-2 information from payroll and human resources professionals
- “Verifying” tax return information over the phone
- Pretending to be from the tax preparation industry
Tax Refund Scam Artists Posing as Taxpayer Advocacy Panel
This one is an email scam that notifies taxpayers about a tax refund. The email appears to be from the Taxpayer Advocacy Panel and the emails appear to be legit. The goal is to trick unsuspecting victims into providing personal and financial information. Do not respond or click the links in them.
W-2 Scam Targeting Payroll and Human Resources Professionals
Another phishing email scheme that purports to be from company executives and requests personal information on employees. According to the IRS, “The email contains the actual name of the company chief executive officer. In this scam, the ‘CEO’ sends an email to a company payroll office employee and requests a list of employees and financial and personal information including SSNs.”
Phishing Scam Targeting National Capital Area
Email scammers citing tax fraud are trying to trick victims into verifying “the last four digits of their social security number” by clicking on a link provided. The criminals specifically state that this is for tax filers in the District of Columbia, Maryland and Virginia. As a further attempt to trick residents of the Capital region, the email scam even suggests that information from recent data breaches across the nation may be involved.
The IRS is doing everything they can to fight scammers. They’ve expanded the filters they use to detect identity theft refund fraud from 11 in 2012 to 183 in 2016. Tax returns identified by these filters are held during processing until the IRS can verify the taxpayers’ identities. There’s also a new mandate that no credit or refund for an overpayment for a taxable year shall be made to a taxpayer before Feb. 15 if the taxpayer claimed the Earned Income Tax Credit or Additional Child Tax Credit on the return. This means next year, taxpayers could wait longer for their return in order to give the IRS time to verify the identity of the person receiving the refund. More on the mandate here.
Tax Fraud Quick Facts
The IRS will never:
- Angrily demand immediate payment over the phone, nor will the agency call about taxes owed without first having mailed you a bill.
- Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
- Require you to use a specific payment method for your taxes, such as a prepaid debit card.
- Ask for credit or debit card numbers over the phone.
What to do if you receive a suspicious IRS-related communication
|You receive an email claiming to be from the IRS that contains a request for personal information, taxes associated with a large investment, inheritance or lottery.||
|You receive a phone call from someone claiming to be from the IRS but you suspect they are not an IRS employee …||
|You receive a letter, notice or form via paper mail or fax from an individual claiming to be the IRS but you suspect they are not an IRS employee …||Go to the IRS home page and search on the letter, notice, or form number. Fraudsters often modify legitimate IRS letters. You can also find information at Understanding Your Notice or Letter or by searching Forms and Pubs.
|You receive an unsolicited fax, such as Form W8-BEN claiming to be from the IRS, requesting personal information …||Please send us the email or scanned fax via email to email@example.com (Subject: ‘FAX’).|
|You receive an unsolicited telephone call or email, involving a stock or share purchase, that involves suspicious IRS or Department of Treasury documents such as “advance fees” or “penalties” …||… and you are a U.S. citizen located in the United States or its territories or a U.S. citizen living abroad.
… and you are not a U.S. citizen and reside outside the United States.
|You discover a website on the Internet that claims to be the IRS but you suspect it is bogus …||… send the URL of the suspicious site firstname.lastname@example.org (Subject: ‘Suspicious Website’).|
|You receive an unsolicited text message or Short Message Service (SMS) message claiming to be from the IRS …||
Please share this information with clients, family and friends.