Posts Tagged ‘IRS’

Scam Alert: IRS Urges Taxpayers to Watch Out for Erroneous Refunds

Beware of Fake Calls to Return Money to a Collection Agency

News Release
IR-2018-27, Feb. 13, 2018

WASHINGTON — The Internal Revenue Service today warned taxpayers of a quickly growing scam involving erroneous tax refunds being deposited into their bank accounts. The IRS also offered a step-by-step explanation for how to return the funds and avoid being scammed.

Following up on a Security Summit alert issued Feb. 2, the IRS issued this additional warning about the new scheme after discovering more tax practitioners’ computer files have been breached. In addition, the number of potential taxpayer victims jumped from a few hundred to several thousand in just days. The IRS Criminal Investigation division continues its investigation into the scope and breadth of this scheme.

These criminals have a new twist on an old scam. After stealing client data from tax professionals and filing fraudulent tax returns, these criminals use the taxpayers’ real bank accounts for the deposit.

Thieves are then using various tactics to reclaim the refund from the taxpayers, and their versions of the scam may continue to evolve.

Different Versions of the Scam

In one version of the scam, criminals posing as debt collection agency officials acting on behalf of the IRS contacted the taxpayers to say a refund was deposited in error, and they asked the taxpayers to forward the money to their collection agency.

In another version, the taxpayer who received the erroneous refund gets an automated call with a recorded voice saying he is from the IRS and threatens the taxpayer with criminal fraud charges, an arrest warrant and a “blacklisting” of their Social Security Number. The recorded voice gives the taxpayer a case number and a telephone number to call to return the refund.

As it did last week, the IRS repeated its call for tax professionals to step up security of sensitive client tax and financial files.

The IRS urged taxpayers to follow established procedures for returning an erroneous refund to the agency. The IRS also encouraged taxpayers to discuss the issue with their financial institutions because there may be a need to close bank accounts. Taxpayers receiving erroneous refunds also should contact their tax preparers immediately.

Because this is a peak season for filing tax returns, taxpayers who file electronically may find that their tax return will reject because a return bearing their Social Security number is already on file. If that’s the case, taxpayers should follow the steps outlined in the Taxpayer Guide to Identity Theft. Taxpayers unable to file electronically should mail a paper tax return along with Form 14039, Identity Theft Affidavit, stating they were victims of a tax preparer data breach.

Here are the official ways to return an erroneous refund to the IRS.

Taxpayers who receive the refunds should follow the steps outlined by Tax Topic Number 161 – Returning an Erroneous Refund. The tax topic contains full details, including mailing addresses should there be a need to return paper checks. By law, interest may accrue on erroneous refunds.

If the erroneous refund was a direct deposit:

  1. Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the IRS.
  2. Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.

If the erroneous refund was a paper check and hasn’t been cashed:

  1. Write “Void” in the endorsement section on the back of the check.
  2. Submit the check immediately to the appropriate IRS location listed below. The location is based on the city (possibly abbreviated) on the bottom text line in front of the words TAX REFUND on your refund check.
  3. Don’t staple, bend, or paper clip the check.
  4. Include a note stating, “Return of erroneous refund check because (and give a brief explanation of the reason for returning the refund check).”

The erroneous refund was a paper check and you have cashed it:

  • Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.

  • If you no longer have access to a copy of the check, call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) (see telephone and local assistance for hours of operation) and explain to the IRS assistor that you need information to repay a cashed refund check.

  • Write on the check/money order: Payment of Erroneous Refund, the tax period for which the refund was issued, and your taxpayer identification number (social security number, employer identification number, or individual taxpayer identification number).

  • Include a brief explanation of the reason for returning the refund.

  • Repaying an erroneous refund in this manner may result in interest due the IRS.

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How scammers make you pay — Federal Trade Commission

Here’s one of the top questions we get from people: Is this a scam? Whatever the “this” looks like, here’s our best answer to that question: Did someone say you can only pay by wiring money, putting money on a gift card, or loading money on a cash reload card? If they did, then yes: that is a scam.

Here’s a video that has, in a little more than a minute, some of the scam scenarios we see – and what you should do about them.

Whether someone tells you to pay to claim a prize, help someone out of trouble, or deal with tax issues from the (so-called) IRS: nobody legitimate is ever going to say you have to pay by wiring them money, getting iTunes cards, or putting money on a MoneyPak, Vanilla Reload, or Reloadit card.

So: watch the video. And if anyone ever insists you pay in one of those ways, tell the FTC. Because that will be a scam we want to know about.

If robots call to say you owe back taxes, don’t believe them

Posted Jan. 16, 2017, at 6:19 a.m.

Which of the following is a scam?

— You get a phone call saying you owe money to the Internal Revenue Service and should pay by way of an iTunes card.

— A caller says she is an IRS official demanding immediate payment of overdue taxes, and the number on your caller ID appears to be from the local IRS office.

— A caller identifies himself as a law enforcement officer and says you face immediate arrest if you don’t wire money for overdue taxes.

— An email bearing an official-looking IRS logo asks you to “update your IRS e-file immediately.” The email mentions IRSgov — without a dot separating “IRS” and “gov.”

If you answered that all of the above are scams, you are correct.

The investigative arm of the IRS says that 1.8 million people have reported receiving impostor calls. More than 9,600 victims have been scammed out of more than $50 million.

Phishing and malware incidents rose roughly 400 percent during the 2016 tax filing season. Despite officials’ best efforts to curb the increase, it’s expected that the numbers of tax-related scam attempts will continue to grow.

Increasingly popular with scammers is the robo-call. The crooks leave urgent call-back requests, demanding payment of “back taxes” with gift cards. IRS officials say such demands are clear signs of a scam.

Other callers may ask for payment of a nonexistent “federal student tax.” People they call are told to wire money — another sure sign of a scam — with threats of legal action unless payment comes at once.

Another scheme involves a call saying the IRS “just needs a few details” to speed up the processing of your refund. The scammer tries to get personal information such as Social Security numbers, bank routing numbers or other sensitive data such as credit card numbers.

Human resources and payroll professionals have been targeted as well, through requests for information about employees. A scammer posing as the company’s CEO requests personal and financial information, including Social Security numbers.

In an effort to catch scammers and identity thieves, the IRS is delaying refunds this year for anyone claiming the earned income tax credit (EITC) or the additional child tax credit (ACTC). That move is expected to give the IRS added time to weed out more sophisticated fraudulent returns. It may also hurt lower income taxpayers who file early and likely will be waiting at least until late February for refunds. Offers to “help speed up your refund” may be more scams.

Sen. Susan Collins, R-Maine, chairs the Senate’s Special Committee on Aging, which has published a guidebook on avoiding scams. Read it online at aging.senate.gov/imo/media/doc/217925%20Fraud%20Book%20Final.pdf. You also can call the committee’s fraud hotline (1-855-303-9470) for information or to report fraud attempts.

The IRS offers a summary of our legal protections in the Taxpayer Bill of Rights at irs.gov/taxpayer-bill-of-rights.

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, ME 04412, visit https://necontact.wordpress.com or email contacexdir@live.com.

Tax season brings out worst phone scammers

CONSUMER FORUM

Posted March 21, 2016, at 9:35 a.m.

“Hi, I’m calling from the Internal Revenue Service to verify some information on your income tax filing. Just to be sure I have it right, could you tell me…”

The caller may give you a phony name and badge number and may have spoofed the phone number to make it appear you really were getting a call from an IRS office. But it was just one of the nearly 900,000 phone scam attempts reported to the Treasury Inspector General for Tax Administration since October 2013. The agency says it knows of more than 5,000 victims who have been tricked out of more than $26.5 million in such scams.

The tricksters are successful because they play on our fears. We might fear being sent to prison, being deported or having our credit score lowered. Scammers have no power or legal authority to do any of those things, but the threats still concern us.

They concern seniors and students, especially. Seniors are frequent targets because they’re generally home, they answer the phone and they tend to be a bit more trusting than younger people.

Crooks target students with phony IRS threats and with offers to help “fix” their student loan situations. Don’t pay an upfront fee for something you can probably do for free.

Once the offer or threat is made, the punch line amounts to “pay up or else.” Do so by wire transfer or prepaid debit card — untraceable and not recoverable. Several scammers might call to make you think their story is real. Once you send the money away, it’s gone, straight into the pockets of the crooks.

The IRS estimates that phishing schemes have gone up 400 percent just this year. The agency — indeed, all legitimate businesses and government entities — do not do business by calling first. If they call at all, a real business or agency will leave a message, giving you a chance to verify the correct phone number to call.

That last point is important, of course, because of scammers’ ability to spoof phone numbers, fooling caller ID systems that may display a genuine business or government number. The crooks are really calling from disposable cellphones, but only they know that’s the case.

Impostors use our emotions in other ways, too. Concern for family or friends kicks in when we get a call that someone has been in an accident or was jailed while in a foreign country. A call to someone close to the supposed victim can determine the truth. Wiring money based on a single phone call usually ends up benefitting only a scam artist.

One last major group of impostors pretends to be from “Microsoft technical services” and says your computer needs fixing. They’re not, and it doesn’t.

They’re looking to have you press the combination of keys that turns control of your computer over to them, so they can download viruses or other malware and hold your computer for ransom. When they call, just hang up.

Today’s scammers might also use old-fashioned trickery. Some impersonate municipal workers, “checking water lines” or using other ruses to get inside your home. If you did not call for the service being offered, don’t open the door. If the scammer refuses to leave or pressures you, call 911.

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, ME 04412, visit https://necontact.wordpress.com or email contacexdir@live.com.

Identity thieves try to cash in during tax filing season

CONSUMER FORUM

Posted Feb. 01, 2015, at 9:53 a.m.

click image to report scams, waste and abuse

Two headlines top the news near the start of this income tax season.

Thieves who steal Social Security numbers and other personal data do so in order to file phony tax returns and claim rebates they’re not owed.

And crooks posing as Internal Revenue Service officials are calling people and, in many cases, bullying them into sending money they don’t owe.

They use common names and all kinds of tricks. They may say they’re calling from the IRS criminal division. They might have technology that will spoof a caller ID, making it appear they’re calling from a real IRS office. They threaten those they consider easier targets — such as older people and recent immigrants — with fines, jail terms, job loss, even deportation.

The crooks do their homework before calling. They might know a person’s Social Security number — or at least the last four digits — and other personal details that lend credence to their pitch. Demanding immediate payment is a tipoff it’s a scam — the real IRS first would notify you by letter of any official action — and the agency never would demand payment by a debit card or wire transfer.

Losing a one-time payment is bad enough. Thousands of taxpayers have filed their income taxes only to find a crook has stolen their identities, filed fraudulently and collected their refunds illegally.

The IRS says after such discoveries, it takes an average of four months to get a refund to its rightful recipient. That person also needs to go through the hassle associated with identity theft. Perhaps ironically, prisoners’ Social Security numbers often are tempting targets, because inmates are less apt to be on top of their tax or banking activities.

The Treasury Inspector General for Tax Administration, or TIGTA, says it has received reports of 290,000 scam calls since October 2013, and nearly 3,000 victims have lost a total of $14 million. The IRS has been working to curb these crimes, saying it spotted 19 million suspicious returns since 2011 and prevented more than $63 billion in fraudulent returns. Read about ways to spot impersonators and report scams at Treasury.gov/tigta.

Consumers can and should take all the usual steps to prevent fraud: use firewalls and antivirus software, use strong passwords and change them often on all online accounts and reveal your Social Security number only when it’s absolutely necessary.

If you become a victim, the IRS says it wants to help. Read about the agency’s prevention and detection efforts at IRS.gov/Individuals/Identity-Protection.

The IRS is also warning consumers about unscrupulous preparers who push filers to make inflated claims. Often, these preparers will demand an up-front fee; they may also refuse to give the taxpayer a copy of the return. Both are things that legitimate tax preparation pros don’t do.

You may qualify for free help preparing your income tax filings. Seniors can check with AARP or the local agency on aging. The Volunteer Income Tax Assistance, or VITA, program gives free tax help to people who make $53,000 or less, have disabilities, are older or who speak little English and need help preparing their returns.

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, ME 04412, visit 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 https://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.

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