Thieves target children as easy victims of identity theft – Bangor Daily News

CONSUMER FORUM

By Russ Van Arsdale, Executive Director, Northeast CONTACT

Posted May 12, 2013, at 12:46 p.m.

Here’s a quick quiz: Which of the following scenarios means your child has become a victim of identity theft?

• You receive a notice from the Internal Revenue Service that your child did not pay income taxes, or that the child’s Social Security number was used on another person’s income tax return.

• You or your child are turned down for government benefits because benefits are being paid to another account bearing the child’s SSN.

• You get bills or collection calls for goods or services that you did not order.

The correct answer is: “All of the above.” Each scenario could be an example of a child’s identity being stolen.

A study by Carnegie Mellon CyLab in November 2011 found that 10.2 percent of more than 40,000 juveniles who were studied experienced some kind of identity theft or fraud. The comparable rate among adults was 0.2 percent.

Why the big difference? Children are routinely issued SSNs as infants; if a child’s number is stolen, the theft may not become apparent for months or even years. Those numbers are prime targets for thieves, who look for SSNs with clean histories. With them, thieves can commit financial fraud, do an end-around bad credit ratings and get around constraints placed on illegal immigrants.

Theft can also occur within families. A driver whose license is suspended or revoked might “borrow” the child’s SSN to establish a new identity and regain a license. A person might assume the identity of another family member to repair credit, apply for a job or to avoid arrest.

When a parent discovers that the child’s ID has been stolen, he or she bears the burden of proving that the child is in fact a child, and that the child did not run up the bills that someone else is trying to collect. The parent becomes lead investigator, trying to figure out how the child’s personal information got into the wrong hands while setting the record straight.

When a person turns 18 and applies for financial aid for college or tries to rent an apartment, only then might he or she discover that his or her identity was stolen years before. The investigation becomes a cold case, with a fraudulently obtained credit history in shambles and no way to find out exactly what happened. The thief often uses the identity until the credit history is destroyed and the thief can no longer get credit using that identity.

Parents are urged to check their child’s credit history when the child is no older than 16, to make sure that history is clear (access the three major reporting agencies for a free annual report at www.AnnualCreditReport.com).

The nonprofit Identity Theft Resource Center (www.idtheftcenter.org) says sometimes parents who get in financial trouble use the SSN of their own child in an effort to rebuild their financial lives. They may think they will pay off their bills in time, so that their child’s credit history won’t be damaged; that may or may not be the case.

Identity theft was the Federal Trade Commission’s leading complaint last year (the 13th straight year the crime ranked number one), with over 369,000 complaints. The FTC has step-by-step help at its website: http://www.consumer.ftc.gov/features/feature-0014-identity-theft. The Maine Attorney General’s website ( http://www.maine.gov/ag/consumer/index.shtml) has a checklist of action steps as well. Victims may also contact the Identity Theft Resource Center at 888-400-5530.

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.

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.

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.

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.

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:

1. 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).

2. Don’t give out your financial or personal information, if you can’t be sure that data won’t be misused.

3. 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.

 

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

Refund anticipation loans are risky business

CONSUMER FORUM

By Russ Van Arsdale, Executive director, Northeast CONTACT

Posted Sept. 18, 2011, at 6:34 p.m.

The largest tax preparation service in the country has received the message about refund anticipation loans. Consumers don’t want their high costs, and consumer advocates are hoping others in the business follow the lead.

H&R Block announced late last year that it was discontinuing its RAL program. The move came after regulators told Block’s third-party lender to stop putting money into the program. Consumer watchdogs have long decried the practice, which can rack up serious interest payments for the short-term loans.

A tax preparer makes an anticipation loan based on the refund a client expects to receive. Rather than waiting for the refund, the client agrees to accept a loan minus a fee and the preparer’s cost of doing the tax return.

Anticipation loans can hit low-income people really hard. Pressed for cash most of the time, the poor have been unwilling and unable in the past to wait the roughly eight weeks it used to take the Internal Revenue Service to crank out their refunds. By signing an agreement to pay a hefty fee up front, low-income taxpayers could get a portion of their expected refund several weeks ahead of people who waited for a check from the IRS.

The Consumer Federation of America estimates that RALs took $600 million out of 7.2 million taxpayers’ pockets in 2009. Bill Cobb, Block’s chief executive officer, said the company’s revenues were strong last year without income from the RALs, and its analysts concluded it didn’t need to make such loans again in 2012.

JP Morgan Chase drew cheers from the consumer community in the spring of 2010, when it announced the end of its RAL program. Chase cited “increased regulator scrutiny” when it announced that RALs were no longer “a strategic fit” in its business plan.

There’s less incentive to take out a RAL these days. The IRS anticipates that next year, average taxpayers who file electronically can expect refunds within two weeks. That makes the expensive anticipation loans less attractive, although that quicker cash is still attractive to many consumers.

Meanwhile, Block isn’t out of the quick cash business entirely. The firm offers what are called refund anticipation checks, which pay the cost of the tax preparation in advance of the IRS refund. A RAC is a temporary bank account, set up at a cost of about $30, only to receive an IRS refund check. Consumers get their money by way of a check or prepaid card, which could carry a fee, too. When the money is gone, the account closes automatically.

While RACs are generally cheaper than RALs, they don’t make much sense financially. Consumers would be better served by opening a regular checking account, which would enable direct deposits, and therefore faster refunds (see Consumer Forum, Dec. 10, 2010).

We agree with critics who, while recognizing the need for such financial arrangements, cringe at charging consumers high rates to borrow their own money.

Other tax preparers know that the big guns are out of the market, and they’re expected to jump in to fill the vacuum. Three national consumer watchdog groups last week called for an end to such loans, calling them “high cost and risky.”

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 http://necontact.wordpress.com, or email contacexdir@live.com.

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.

“Tax Package Mailing to End Following Growth of E-File.” Internal Revenue Service. 12 Nov. 2010. Web. 16 Jan. 2011. <http://www.irs.gov/businesses/small/article/0,,id=228152,00.html>.  By Mail: You can call 1-800-TAX-FORM (800-829-3676) Monday through Friday 7:00 am to 10:00 pm local time – except Alaska and Hawaii which follow Pacific time – to order current year forms, instructions and publications as well as prior year forms and instructions by mail. You will receive your order by mail, usually within 10 days. Forms may be available at local libraries and post offices. Or visit Bangor Area Internal Revenue Office: 324 Harlow St., Bangor, Maine