Tax Scams! Do not get caught by a scam!
We all have heard of people, maybe know of people, or even ourselves have fallen prey to Scams and have lost hundreds to thousands of dollars of hard-earned money. In this article we will discuss:
- How to know if it is truly the IRS contacting you
- Tax Scams on both individuals and professionals
- W2 Solicitations
- Email and Phishing schemes
- How to report a tax-related schemes
- Scams, identity theft, and fraud
Is the IRS really contacting you?
There is nothing scarier then receiving a phone call, letter, or email “from the IRS”. So many people fall victim to these scams because the victim is told they will be imprisoned, have lawsuits brought upon them, or other enforcement action (such as deportation) that will be taken if they do not pay immediately using a pre-loaded debit card or gift cards.
The IRS will NOT
- Call you demanding immediate payment
- Threaten you with lawsuits, imprisonment, or deportation
- Demand IMMEDIATE payment via gift cards, pre-loaded debit cards, or wire transfers
- Ask for credit/debit card numbers, bank routing information, W2 information over the phone.
The IRS WILL
- Send several letters (“Notices”) via the United States Postal Service
- After several letters, they may call or come to a home or business unannounced to collect on a debt
- Should they VISIT, they will provide two forms of official credentials called a “pocket commission” and a HSPD-12 card. You have the right to see these credentials and verify their information
- Allow you to appeal the amount they say you owe
- They will not demand immediate payment to a source other then the U.S. Treasury.
Being aware of what your rights are as a tax payer (https://www.irs.gov/taxpayer-bill-of-rights) also can be helpful in ensuring that you do not fall victim.
Scams targeting Tax payers
Scams targeting taxpayers have gotten more sophisticated as the years go on. From emails and phone calls to impersonating IRS officials. Being aware of what scams are out there, can help you protect yourself.
IRS-Impersonation Phone Scam.
Callers claim to be from the IRS giving fake names and badge numbers, and even alter caller ID’s to make it look like the IRS is calling you. Victims are told that they owe money and “Must pay NOW” using a pre-loaded debit card or wire transfer, and threatened with arrest, deportation, and or suspension of a business or drivers license should they fail to pay.
Email, phishing and Malware Schemes.
Scammers send out fraudulent emails using the IRS name or logo, and other professional industry logos requesting your information. They tend to seek information relating to refunds, filing status, confirming personal information, to verifying PIN information. Emails sent have attached links designed to trick victims into thinking they are official websites. They will even mention USA.gov and IRS.gov with slight differences such as no dot between USAgov and IRSgov. The information that these phishing emails collect are used to file false tax returns or carry malware, which can infect your computers allowing criminals to access your files or track your key strokes to gain information.
Individuals Posing as a Taxpayer Advocacy Panel (TAP)
Some tax payers receive emails that appear to be from the Taxpayer Advocacy Panel (TAP) regarding a tax refund. These emails however are a phishing scam used to trick victims into providing personal and financial information. TAP is a volunteer board that advises the IRS on systemic issues affecting taxpayers and will NEVER request, nor does it have access to any personal or financial information regarding a taxpayer.
FBI Themed Ransomware
FBI themed ransomware impersonate both the IRS and FBI sending out emails with a link stating that the “FBI requires a completed questionnaire to be signed and sent back within 10 days”. When victims click the link provided it downloads ransomware onto there computer, forcing their victims to pay a ransom to receive a decryption key, and frequently the scammers will not provide the decryption key even after the ransom is paid.
“Federal Student Tax”
Targeting students and parents, scammers will imposter the IRS and demand immediate payment for this non-existent tax.
As stated before, the IRS does not initiate contact with taxpayers via email, text messages, or social media. Nor will they just show up and request personal or financial information, threaten lawsuits, imprisonment or other enforcement action.
Scams Targeting Professionals
Not even professionals are safe from scams. But due diligence on the professional’s behalf pays off. By verbally confirming changes requested via email with clients before making the changes allows for an added layer of protection.
Last-Minute Email Scam
Last minute changes requested via email to a tax preparer stating that they would like to change their refund destination, often to a pre-paid debit card. As stated before, the IRS urges tax prepares to verbally confirm changes requested via email with clients before making the changes, allowing for an added layer of protection for both business and individual.
Soliciting Form W-2 Information from payroll and human resource professionals
Cyber-criminals use various spoofing techniques to disguise and email making it appear to be from an organization’s executive. The email will be sent to an individual in payroll or human resource asking for a list of all employees and their W-2 forms.
Cyber-criminals have even gone as far as to create false IRS websites and IRS impersonation emails that they send to a victim to gather more information and to prolong the actual reporting of the incident, giving the cyber criminals more time to use the data they stole.
Should your business fall pray to a scam, report the data loss immediately to the appropriate IRS and FBI officials then inform your employees of the data breech. Share with them the IRS publication 5027: Identity Theft for Taxpayers. Which includes information on “Credit Freeze”, filing a complaint with the Federal Trade Commission (that leads the federal agency on Identity issues), and review the Federal Trade Commission’s website www.identitytheft.gov/ for additional steps on how to recover from Identity theft.
Should you or someone you know fall victim to a scam, here are some links that might be helpful:
- IRS Impersonation Scam Reporting to the Treasury Inspector General for Tax Administration at treasury.gov/tigta/contact_report_scam.shtml
- Phone Scams reported to the Federal Trade Commission to ftccomplaintassistant.gov/#crnt&panel1-1
- Unsolicited Emails claiming to be from the IRS or IRS Related, send directly to firstname.lastname@example.org.
- Phishing and Online scams to irs.gov/privacy-disclosure/report-phishing
- Ransomware Attempt to the Internet Crime Complaint Center: IC3.gov
- Data loss related to the W-2 Scam
- Email the following information to email@example.com
- Business Name
- Business employer identification number (EIN) associated with data loss
- Contact Name
- Contact phone number
- Summary of how the data was loss occurred
- Volume of employees impacted by the breach
- Report a loss to a state tax agency to the Federation of Tax Administrators StateAlert@taxadmin.org
- Report a data loss to other law enforcement officials at the FBI ic3.gov/default.aspx
- Report receiving the W-2 phishing email scam directly to firstname.lastname@example.org with the subject line: W-2 Scam
- Internet Crime Complaint operated by the FBI ic3.gov/default.aspx
- Email the following information to email@example.com
Should you have any questions please contact us!
18 Pleasant Street, Brunswick, ME 04011, 1-866-260-6929
Internal Revenue Service: IRS.gov (December 8, 2017)
Federal Trade Commission: FTC.gov (December 8, 2017)
Federation of Tax Administrators: taxadmin.org (December 8, 2017)
Federal Bureau of Investigation, Internet Crime Complaint Center: ic3.gov/default.aspx (December 8, 2017
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
Fred Burgess is a financial advisor located at Regent Financial Services, 18 Pleasant Street, Brunswick, Maine 04011. He offers securities as a Registered Representative of Commonwealth Financial Network®, Member FINRA/SIPC. He can be reached at 207-725-6929 or at firstname.lastname@example.org