Don’t Fall Prey to Tax Time Fraud

Posted by Margo Leiter, CISM on Mar 22, 2021 9:15:00 AM
    

Scammers routinely use the anxiety of tax season to prey on the unsuspecting, and this year, they’re also using the pandemic and the government’s Economic Impact Payments to steal money and identities from taxpayers.
Scammers will attempt to steal Economic Impact Payments, especially among individuals in nursing homes who may be more vulnerable to ID theft. Scammers also file false tax returns or supply other bogus information to the IRS to divert refunds to wrong addresses or bank accounts.

The IRS has made great strides against refund fraud and theft in recent years, but they remain an ongoing threat. Taxpayers can consult the Coronavirus Tax Relief page of IRS.gov for assistance in getting their EIPs.

Anyone who believes they may be a victim of identity theft should consult the Taxpayer Guide to Identity Theft.

EIP or Refund Theft is among the IRS list of the top “Dirty Dozen” tax scams. Wauchula State Bank wants to help individuals learn to recognize these scams, so together we can help prevent them from happening. Here’s the rest of the “Dirty Dozen:”

1. Phishing
Always be on the lookout for emails and texts pretending they are from the IRS. Do not click any links or open attachments in these emails. If you do, you could be installing software that can put your information at risk.

Some of the subject lines scammers use include key words to get your attention, such as “coronavirus,” “COVID-19,” and "Stimulus.” Remember that the IRS will never initiate contact with taxpayers via email about a tax bill, refund, or Economic Impact Payment.

2. Fake Charities
Criminals frequently exploit natural disasters and other situations such as the current COVID-19 pandemic by setting up fake charities to steal from well-intentioned people trying to help others in times of need. Fake charity scams generally increase during times like these.

In these schemes, scammers use many methods to contact individuals by calling, texting, emailing, or speaking in person. They set up bogus names on their caller ID, bogus websites that are similar to a legitimate charity’s site, and sometimes claim they are working on behalf of the IRS to help victims file claims and get tax refunds.

Here are some steps you should follow if you intend to gift a charity:

  • Initiate your own search, check the webpage for the correct spelling, and look for a lock in the webpage description. The lock indicates that the site is secure.

  • Do not be pressured or intimidated into giving money over the phone from someone who calls you.

  • Do not trust the caller ID.

  • If you are asked to give by gift cards or wire transfers, that is a big red flag, and most likely a scam.
    crews banking corporation tax id theft info
3. Threatening Impersonator Phone Calls
The scammer calls pretending to be the IRS and attempts to instill fear and urgency by demanding an immediate payment. Sometimes they threaten to deport or revoke a license unless paid. Remember, the real IRS never does this.

4. Social Media Scams
Do not always trust your friends on social media. They may have had their email taken over by a scammer and are sending you a fake charity and requesting a contribution.

5. Senior Fraud
Seniors are a frequent target of tax scams. Fraud goes down substantially if trusted friends or family members are taking an interest in senior affairs.

Ironically, since seniors are becoming more comfortable with using technology, such as social media, scammers are taking advantage of that as another way to target them.

6. Scams targeting non-English speakers
IRS impersonators and other scammers also target groups with limited English proficiency. A common one remains the IRS impersonation scam, where a taxpayer receives a telephone call threatening jail time, deportation, or revocation of a driver’s license from someone claiming to be with the IRS. Taxpayers who are recent immigrants often are the most vulnerable and should ignore these threats and not engage the scammers.

7. Unscrupulous Return Preparers
Selecting the right return preparer is important. These individuals are entrusted with a taxpayer’s sensitive personal data. Most tax professionals provide honest, high-quality service, but dishonest preparers pop up every filing season, committing fraud, harming innocent taxpayers, or talking taxpayers into doing illegal things they later regret.

8. Offer in Compromise Mills
Taxpayers need to wary of misleading tax debt resolution companies that can exaggerate chances to settle tax debts for "pennies on the dollar" through an Offer in Compromise (OIC). A real OIC is an agreement between a taxpayer and the IRS that settles a taxpayer’s tax liabilities for less than the full amount owed. Such offers are available for taxpayers who meet very specific criteria under the law to qualify for reducing their tax bill.

Dishonest companies attempt to sell the program to unqualified candidates so they can collect a hefty fee from taxpayers already struggling with debt. Such companies are referred to as offer in compromise (OIC) mills. The majority of the OICs submitted through such companies are not accepted by the IRS. Taxpayers can use the IRS free online Offer in Compromise Pre-Qualifier tool to see if they qualify, without hiring a third party.

9. Fake Payments with Repayment Demands
Scammers that steal Social Security numbers, tax id numbers and bank account information may file a return in your name and have the refund directly deposited into your account. Once the refund is deposited, the scammer calls you pretending to be an IRS representative and states an error has been made and you will need to return the money immediately to avoid interest penalties. You are directed to purchase gift cards in the amount of the refund.

The IRS will never demand payment by a specific method. There are many payment options available to you and there’s also a process through which you have the right to question the amount of tax the IRS says you owe. Anytime a taxpayer receives an unexpected refund and a call from out of the blue demanding a refund repayment, you should reach out to you bank institution and the IRS.

10. Payroll and HR Scams
Tax professionals, employers and taxpayers need to be on guard against phishing designed to steal your W-2s and other tax information. These scams are labeled Business Email Compromise (BEC) or Business Email Spoofing (BES). This is particularly true with employees working from home due to COVID-19. Currently, two of the most common types of these scams are the gift card scam and the direct deposit scam.

In the gift card scam, a compromised email account is often used to send a request to purchase gift cards in various denominations. In the direct deposit scheme, the fraudster may have access to the victim’s email account (also known as an email account compromise or EAC). They may also impersonate the potential victim to have the organization change the employee’s direct deposit information to reroute their deposit to an account the fraudster controls.

11. Ransomware
Ransomware is malicious software that lock up or encrypts your files or your company network. The scammer will only unlock the files if you pay a ransom to them in bitcoin, which is untraceable. It happens when someone clicks on an email with a malicious link. The email usually has an urgent subject line to get the user to click the malicious link, which automatically downloads malware onto your computer.

If you or someone you know has been a victim of a tax scam, report it to IRS at Tax Scams - How to Report Them.

Posted by Margo Leiter, CISM

Margo Leiter is a resident DeSoto County, where she began her banking career in 1981 at Crews Bank & Trust, formerly known as the First State Bank of Arcadia. In 2008, she took on the role of the Chief Information Security Officer for the Crews Banking Corporation holding company, which includes Wauchula State Bank, Charlotte State Bank & Trust, Englewood Bank & Trust and Crews Bank & Trust. She subsequently became a Certified Information Security Manager (CISM), overseeing management of the company’s Information Security Program to ensure sensitive customer information is safe and secure. In her personal life she enjoys shopping, traveling with her husband, and spending quality time with her children, grandchildren and church family.

Topics: Tax, Security, economy, stimulus checks, money, scam