Russ and Joy discuss the possibility of your tax refund going to someone else. Watch Video
Archive for the ‘IRS’ Category
17 Feb
To prevent identity theft, guard your Social Security number
CONSUMER FORUM
By Russ Van Arsdale, Executive Director, Northeast CONTACT
Posted Feb. 17, 2013, at 3:12 p.m.
Almost everything you read about preventing identity theft advises that you guard your Social Security number, or SSN, like gold. Why, then, do some agencies insist that you carry certain documents containing your SSN everywhere you go? And as one local consumer asked us, why when you call some companies does everyone who answers the phone need to know your SSN?
We know that identity thieves try all sorts of tricks to access our SSNs. With the numbers and some other personal information, they can open accounts or apply for jobs posing as you. They can also try to get a refund from the Internal Revenue Service; alert the IRS immediately if you receive a letter saying:
• The IRS has information you’ve been paid by an employer that you don’t know.
• It has received more than one tax return with your name on it.
The IRS will work with you to straighten things out. Of course, it’s simpler if you can avoid the hassle in the first place by keeping your SSN out of the hands of thieves.
That can be a problem if you carry it everywhere. Thieves are not shy about picking your pocket or handbag and helping themselves to your SSN, as well as whatever cash you might be carrying. For that reason, experts in preventing identity theft advise you to leave your Social Security card and other documents that contain your number at home, unless it’s mandatory that you have it.
That’s where the San Diego-based Privacy Rights Clearinghouse, or PRC, has a problem with some companies and government agencies. PRC notes that in 2006, the U.S. Government Accounting Office found that 42 million Medicare cards, eight million Department of Defense ID cards and seven million Veterans Affairs ID cards carried SSNs. It took until the middle of 2011 for the numbers to begin disappearing from the military IDs.
The Social Security Number Protection Act became law in December 2010, but will take three years to fully implement. Many consumers are unhappy that their SSNs appear on their Medicare cards, which they may feel obligated to carry. The PRC suggests you photocopy your Medicare (or other) insurance card and either blacken or cut out the last four numbers of your SSN. Cut the photocopy to wallet size and carry that, instead of your card with the full number on it. Once you’re in a database, that should be sufficient for identification or authentication purposes.
The “last four numbers of your Social” has become a theme song for entities that still use SSNs as identifiers. We’re asked to believe that revealing a partial number is not risky. Consumers Union, publishers of Consumer Reports, disagreed in a September 2007 letter to the Federal Trade Commission, saying “use of even a partial SSN may be an ineffective authenticator given the widespread availability of these numbers.”
During this tax season, identity thieves are sending out bogus emails by the millions, trying to trick us. Don’t give personal or financial information to a caller or email purporting to be from the IRS — the agency does not do business in those ways. And don’t click on anything in any unsolicited email.
For more on the subject, visit the Federal Trade Commission website at www.ftc.gov and search “tax related identity theft.”
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412, visit http://necontact.wordpress.com or email contacexdir@live.com.
13 Feb
A (Potentially) Taxing Situation | Consumer Information from FTC
February 12, 2013
by
Carol Kando-Pineda
Attorney, FTC
Tax season is here. It’s time to get your files and forms in order. You may be well-versed in W-2s and 1099’s, but do you know that an identity thief can mess up your tax files or even get to your tax refund before you can file for it?
Tax-related ID theft can happen in a few ways; all of them involve your Social Security Number (SSN). If someone uses your SSN to get a job, the employer reports that person’s income to the IRS using your SSN. When you file your tax return, you don’t include those earnings. The IRS doesn’t know those wages were reported by an employer you don’t know, so the agency would send you a notice or letter saying you didn’t report that income.
Sometimes an identity thief uses your SSN to file for — and get — your tax refund before you file. Then, when you file your return, IRS records show the first filing and the refund. You’ll get a notice or letter from the IRS saying more than one return was filed for you.
If this happens to you — or if the IRS sends you any notice or letter indicating a problem — contact them immediately. Visit the IRS online or call 1-800-908-4490. Specialists will help you get your tax return filed, get you any refund you may be due, and protect your IRS account from identity thieves in the future.
One additional point: the IRS never starts contact with a taxpayer using email, text, or social media that asks for personal or financial information. If you get an email that claims to be from the IRS, do yourself a favor: don’t reply or click on any links. Instead, forward it to phishing@irs.gov.
On February 20 and 21, 2013, the FTC, federal and state enforcement agencies, and consumer advocacy groups will hold a series of Town Halls in South Florida to discuss how to combat tax-related ID theft.
If you suspect identity theft, learn more about how to repair the damage.
10 Feb
As tax time approaches, be wary of tax scams
CONSUMER FORUM
By Russ Van Arsdale, Executive Director, Northeast CONTACT
Posted Feb. 10, 2013, at 6:20 p.m.
With February upon us, many Mainers are thinking about income taxes and wondering, can the filing deadline really be just a couple of months away?
It is, and the income tax fraud perpetrators are hard at work. Don’t let them catch you in one of their scams, like the fake email claiming it has information that you must deal with right now. They might say they have ways you can get extra deductions; they might even claim to have a refund check for you.
Or, instead of the carrot, they may wield a stick. The scary subject line might read, “FY 2010 and 2011 tax documents; accountant’s letter.” Uh-oh, an audit must be just around the corner … or it’s the scammers, acting tough and hoping we’ll open that attachment and turn loose the Trojan that will give them access to our computers and everything in them.
There are so many scams out there that the Internal Revenue Service has a website ( http://www.irs.gov/uac/Report-Phishing) devoted to keeping scammers at bay. Before reviewing some pointers, let’s look at some of the IRS’s top 10 scams from last year.
Identity theft tops the list. If the IRS notifies you that you’ve filed two tax returns or that you appear to have received wages from an unknown employer, you may have had your identity stolen. Thieves may have filed a tax return in your name and claimed a refund.
Last winter the IRS went after more than 100 people in 23 states suspected of being identity thieves. In 2011, the agency reported more than 900,000 fraudulent returns relating to identity theft. The IRS has been training thousands of employees to help deter such crimes.
Also on the IRS top 10 list is the phishing scam. It’s really the same old ploy to get you to click on an attachment, which starts a program that wreaks havoc on your computer. Resist the urge. DON’T click on attachments in unsolicited emails. DON’T click on attachments in email from people you know if something looks suspicious. And DON’T click on attachments in email from companies you do business with; it may be a look-alike that crooks have created to fool you. Call the company, or do a manual download rather than clicking.
Watch out for fraudulent tax preparers. Some of them charge big fees with promises of a big refund. They may prompt you to “get all you can” by cutting corners or giving the IRS false information, all of which can land you in jail.
Some scammers claim they can help you move money offshore; if you don’t follow the law exactly, you could be looking at a tax evasion charge. Or, the scammer might give you an account number with instructions to wire your money to it; you may find out too late that it’s the scammer’s account and your money is gone.
Another red flag is a promise of “free money” from the IRS. The scammer will promise a few simple tricks making tax return preparation simpler and prompting larger refunds. The “tips” may be weak or just plain wrong, and the “free” money goes to the crook.
Remember, the IRS does not use email, text messaging or social media to get personal or financial information from filers. If you get a fax claiming to be from the IRS, contact the agency to make sure it’s real. To do that, or for a tax-related question, you can reach the IRS through this website: http://www.irs.gov/uac/How-to-Contact-the-IRS-1.
One bit of friendly advice: If you file electronically, keep a hard copy for your files. And for low- and moderate-income households, there’s free tax preparation help available through the United Way of Eastern Maine (http://www.unitedwayem.org/content/4057/eastern-maine-cash) and Volunteers of America (http://www.voanne.org/Services/TaxAssistance).
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412, visit http://necontact.wordpress.com or email contacexdir@live.com.
30 Dec
Look out for phony charities
CONSUMER FORUM
By Russ Van Arsdale, Executive Director, Northeast CONTACT
Posted Dec. 30, 2012, at 8:11 p.m.
As the end of the year approaches, many of us are thinking about charitable donations. Let’s face facts: Many donations are tax deductible, and many of us need all the deductions we can get.
Of course, the real reason to give is to support a cause that really needs your help. So, make sure when you give, that your money is going where you intend it to go.
That means staying away from nonprofits that may exist more for the benefit of professional fundraisers or overpaid executives than for people that really need help. Unfortunately, there are far too many of these types of “charities” around.
Some are created in response to natural disasters. “Storm chasers,” as they have become known, create websites even before a major storm strikes. The sites contain key words, like “relief,” to attract web searches. They have varying records in their effectiveness in providing real help to those in need after a storm.
The IRS issued reminders earlier this month, after more than 1,000 “relief” websites popped up following Hurricane Sandy:
- Give to recognized charities, and beware of sound-alike names (visit the IRS website, www.irs.gov, to find bona fide charities to which contributions are deductible).
- Don’t give out your financial or personal information, if you can’t be sure that data won’t be misused.
- Don’t give cash. Make donations by check, credit card or some other way that can be documented. And never make out a check in the name of the solicitor.
Scammers may claim to be affiliated with known organizations; sometimes they even use the official logo of a government or relief organization to gain a target’s trust.
Do your own research to be sure you know where your money is going. Keep your scam radar on high: Refuse solicitors who won’t answer questions about their cause; don’t give in to high pressure pitches; and if it’s a telephone solicitation, ask if the caller is a paid solicitor and, if so, what percent of money raised actually goes to the cause. You can always ask that your name be removed from a call list.
Scammers work other angles, too. Some file claims for storm damage that never occurred. Others claim to be doctors and ask for funds “to pay medical bills of injured people.” Once you give in to a phony solicitor, you can bet your name will be shared with other scammers.
Check websites like Charity Navigator and Guidestar that rate the effectiveness of charities. The Better Business Bureau’s Wise Giving Alliance is another resource.
In Maine, check with the Charitable Solicitations Program, part of the state’s Department of Professional and Financial Regulation; call 624-8525 with questions about licensed solicitors or to file a complaint.
If you suspect someone’s perpetrating disaster fraud, notify the U.S. Department of Justice’s National Center for Disaster Fraud (toll-free, 866-720-5721). For charity fraud on the web, notify the Internet Crime Complaint Center ( www.ic3.gov), a partnership of the FBI and the National White Collar Crime Center.
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s all-volunteer, nonprofit consumer organization. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412, visit http://necontact.wordpress.com or email contacexdir@live.com.
1 Apr
Ads disguised as news provoke outrage
CONSUMER FORUM
By Russ Van Arsdale, Executive Director, Northeast Contact
Posted April 01, 2012, at 10:35 a.m.
On reading the full-page ad in Wednesday’s Bangor Daily News, I reacted with confusion, disbelief and a bit of outrage. I knew I would have to question the editors on this and expected they might respond defensively; I did not expect they would be contrite.
The ad in question offered sheets of uncut dollar bills “at face value,” contingent on buying three “protective banker’s portfolios” at a cost of $29 each plus shipping. The ad said “smart collectors are snatching up all the valuable uncut sheets of Gov’t issued money they can get their hands on,” although a disclaimer at the bottom admitted there’s no guarantee of increased future value.
Such a come-on probably would have been dismissed, if what was clearly labeled an advertisement had not looked, to the casual reader, like a news story. “Bangor area zip codes turn up cash for residents,” cried the headline under the large photo of uniformed guards wheeling around loads of the bill sheets. A Google search of the headline wording — minus the Bangor reference — yields hundreds of communities where similar ads have run in the United States and Canada.
Those ads have drawn fire from consumer groups and authorities alike. Last November, the Better Business Bureau reported more than 200 consumer complaints involving World Reserve Monetary Exchange, which placed the BDN ad. According to the Better Business Bureau many of those complaining said the ads were misleading. The bureau noted the ads suggest the offer is limited to a specific geographic area, which is not the case. A supposed time limit on the offer also created a false sense of urgency.
In January, a California lawsuit against Universal Syndications Inc., doing business as World Reserve Monetary Exchange, and Arthur Middleton Capital Holdings CEO Rodney Napier was settled. The firm was accused of falsely advertising “free” gold coins; it was ordered to pay $223,000 in civil penalties and court costs and to reimburse some buyers. The company also is banned from advertising in California the gift of a free item with the purchase of another item, unless it really is free.
We did some digging to find all this out. The Bangor Daily News did some initial vetting when the ad order came in. Steve Martin, BDN’s interim director of sales and marketing, told me the vetting process in this case wasn’t thorough enough.
Martin said the ad won’t be run again. In fact, he’s asking the ad agency that sent it not to send any similar ads to the paper.
“The sources [of such ads] are getting craftier and craftier” in their efforts to make ads look like news coverage, Martin said. He added the paper takes very seriously its duty not to mislead the public, and said every effort will be made to distinguish advertising from news copy in the future.
After spending most of my career as a working reporter, I know how these things can happen. We applaud the BDN for admitting a mistake and working to make sure it’s not repeated.
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded, nonprofit consumer organization. Individual and business memberships are available at modest rates. For assistance with consumer-related issues, including consumer fraud and identity theft, or for information, write Consumer Forum, P.O. Box 486, Brewer 04412, or go to necontact.wordpress.com, or email contacexdir@live.com.
26 Feb
Dirty Dozen tax scams of 2012
CONSUMER FORUM
By Russ Van Arsdale, Executive Director, Northeast Contact
Posted Feb. 25, 2012, at 4:02 p.m.
If you file your federal income tax return early, good for you. If the Internal Revenue Service informs you that it received two tax returns with your name on them, you have been a victim of the most frequent kind of tax scam.
The IRS has just released its “Dirty Dozen” list for 2012. Not surprisingly, identity theft (our example above) is the most frequent type of tax fraud.
It’s something IRS officials say they’re working constantly to deter; the agency says last year it protected taxpayers from roughly $1.4 billion that identity thieves had been trying to steal.
In January, the IRS released the results of a nationwide crackdown on ID theft. The IRS joined forces with the federal Justice Department’s Tax Division and local U.S. Attorneys offices, targeting 105 people in 23 states. If you think your information has been stolen and used for fraudulent tax purposes, visit the special identity theft page at www.IRS.gov/identitytheft.
Number two on the Dirty Dozen list is phishing, the technique ID thieves often use to try to collect people’s personal information. Phony emails or fake websites might solicit information to “help increase your refund” or “provide necessary information.” The IRS does not initiate correspondence through email, and recipients should not respond to such solicitations.
Investigators also report cases of fraudulent activity on the part of some tax preparers. While most people in that business are scrupulously honest, some do try to cut corners and some flagrantly violate the law. Failing to sign or put a Preparer Tax ID number on your return, promising larger than normal refunds or demanding that you split the refund are all examples of unethical behavior by a tax preparer.
Some people who advertise as tax advisers are simply hucksters. They might claim they can get “free money” from the IRS or unusual benefits from Social Security. Other scammers may urge you to make outrageous claims to avoid paying taxes; while it’s within your rights to challenge a tax bill, you can’t simply disobey the law about paying taxes you owe.
Some citizens try to hide money in offshore accounts, despite two widely publicized efforts by the IRS to crack down on tax evaders. The agency said in January that its efforts so far have resulted in the collection of $4.4 billion and that those efforts are ongoing.
Other tax dodging schemes include filing false 1099 forms, or claiming income not received in an effort to get a refund to which the person is not entitled. Another scam is claiming zero income, in hopes of dodging all tax liability. Over-valuing one’s charitable contributions is yet another violation prompting IRS scrutiny.
Disguising the true ownership of corporations is another common tax scam.
The IRS and the states work to discourage such tactics and find out who really is on the hook for business taxes.
Rounding out the list is the misuse of trusts. IRS officials say the improper use of private annuity trusts and foreign trusts is on the rise, often due to promises of tax shelters which may not be realized. The IRS urges people to consult competent advisers before entering into trust arrangements.
For more, visit the Internal Revenue Service website, www.irs.gov and search “Dirty Dozen 2012.”
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded, nonprofit consumer organization. Individual and business memberships are available at modest rates. For assistance with consumer-related issues, including consumer fraud and identity theft, or for more information, write: Consumer Forum, P.O. Box 486, Brewer 04412, go to necontact.wordpress.com, or email contacexdir@live.com.
WABI-TV appearance
16 Jan
Treasury Launches Pilot Program of Prepaid Debit and Payroll Cards for Fast, Safe and Convenient Tax Refunds
Press Release from U.S. Department of the Treasury
1/13/2011
WASHINGTON – Timed for tax season, the U.S. Department of the Treasury launched a pilot today to offer taxpayers a safe, convenient and low-cost financial account for the electronic delivery of their federal tax refunds. The new account card option provides everyday money-saving conveniences and consumer protection features for Americans with limited or no access to traditional banking services.
“This pilot program will provide low- and moderate-income Americans with a low-cost option for faster delivery of their federal tax refund,” said Deputy Secretary of the Treasury Neal Wolin. “This innovative card can be used for everyday financial transactions, such as receiving wages by direct deposit, withdrawing cash, making purchases, paying bills and building savings safely and conveniently, giving users more control over their financial futures.”
As the next step in this pilot, originally announced in September, Treasury will mail letters next week to 600,000 low- and moderate-income individuals nationwide. The letters will invite these taxpayers to consider activating a MyAccountCard Visa® Prepaid Debit Card in time to have their 2010 federal tax refund direct deposited to the card. Compared to paper checks, direct deposit provides a safer, faster and more convenient way to receive a federal tax refund as well as other regular income.
Also this week, Treasury began a companion pilot to encourage tens of thousands of current and potential payroll card users to direct deposit their 2010 federal tax refund onto existing payroll cards. Nationwide, more than 1.7 million workers use payroll cards to receive and access their wages, often because they do not have bank accounts. Working with ADP, a provider of payroll services, Treasury will highlight the safety, ease and convenience of direct deposit onto payroll cards through tax season communications, including materials distributed with pay statements. Continue reading »
16 Jan
IRS no longer mailing tax packages
Tax Package Mailing to End Following Growth of e-File
Business and individual taxpayers will no longer receive paper tax packages in the mail from the IRS. Tax packages contained the forms, schedules and instructions for filing a paper tax return. The IRS is taking this step because of the continued growth in electronic filing as well as to help reduce costs. In early October, the IRS sent a postcard (Notice 1400-A, Notice 1400-J or Notice 1400-E) to businesses that normally receive their tax forms and publications from the IRS. Most businesses receive their tax products from a tax professional or tax software. The postcard explains how to get the tax forms and instructions needed to file future returns.
The information lists the forms and publications that will no longer be mailed:
- Package 1065, the Return of Partnership Income Package; Package 1120, the U.S. Corporation Income Tax Package; and Package 1120S, the S Corporation Income Tax Package. The forms, schedules and related instructions previously included in these packages will continue to be available separately, both electronically and in print.
- Publication 393, Federal Employment Tax Forms Information, will also not be mailed. The IRS encourages businesses to electronically file Forms W-2 even when filing fewer than 250 forms. The benefits for filing electronically are that:
- It’s quicker and more efficient.
- Businesses can check the status of online submissions using the Social Security Administration’s Business Services Online (BSO).
- The BSO will also identify any submission errors.
- Forms and documents can be downloaded at no cost.
- Since most returns for split-interest trust filers are prepared using computers, the IRS will no longer mail Publication 5227, the Split-Interest Trust Information Return.
For any of the products listed above, businesses may go to IRS.gov after January 10, 2011, and click on Forms and Publications, or go directly to IRS.gov/formspubs and follow the directions for getting forms and instructions.
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11 Mar
IRS eases rules for settling tax debt | The Portland Press Herald / Maine Sunday Telegram
IRS eases rules for settling tax debt | The Portland Press Herald / Maine Sunday Telegram.
WASHINGTON – As tax day approaches, the Internal Revenue Service is giving agents more flexibility to work with taxpayers who have seen their incomes drop during the recession.
IRS Commissioner Doug Shulman announced Tuesday that the agency is loosening its rules for negotiating tax settlements for less than the amount owed. The agency also plans to open about 1,000 offices on various Saturdays, beginning March 27, to give taxpayers more opportunities to work with IRS employees to resolve their tax debts.
