Tax-related identity theft is on the rise

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Some safety tips for you and your clients

The dreaded tax day is fast approaching! Please be aware of tax-related identity fraud, which we are being told is on the rise.

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This fraud occurs in several forms. One scheme is to file more than one return using a single Social Security Number. The fraudster steals the SSN and other identifying information, files a return and receives the refund before the true taxpayer has a chance to file. (Or the true taxpayer is a lawyer who always files late.)

Another scheme involves calling the taxpayer to inform him that he owes additional taxes and will have collection actions taken against him. He can get off the hook by providing credit card information to resolve the problem.

A third scheme involves calling the taxpayer to inform her that she received wages or other income from an employer for whom she never worked. Again, she can resolve the problem by paying additional taxes via credit card.

In a similar situation not involving tax-identity fraud, my husband received a voicemail on his cell phone this week indicating a subpoena was about to be served on him either at home or at work and to avoid that subpoena, he could call a telephone number. He is a lawyer, so having a subpoena served wouldn’t be outside of the realm of possibility, but he was able to determine this was a scam based on very limited Internet research.

The IRS advises that anyone who receives a telephone call, letter or e-mail purporting to come from the IRS should call the agency directly at 800.908.4490 to validate the request. In other words, never contact the requester by the method indicated in the communication. Go directly to the source.

The IRS also gives some very common sense advice:  never give personal information without validating the source.

If you are a victim of tax-related identity theft, the IRS recommends the following steps:

  • Notify the IRS at 800.908.4490;
  • If instructed to do so by the IRS after the initial notification, go it its identity verification service website to report the incident.
  • If your return is rejected because of a duplicate filing, complete IRS Form 14039, Identity Theft Affidavit, available at IRS.gov.

The Federal Trade Commission recommends the following steps if you are a victim of identity theft:

  • File a complaint with the FTC at identitytheft.gov;
  • Contact one of the three major credit bureaus to place a “fraud alert” on your credit records:

Be safe out there, use common sense, advise your clients to use common sense, and get those returns filed on time, lawyers!

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IRS issues urgent warning about W-2 phishing scam

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On February 2, the Internal Revenue Service issued an urgent alert to all employers about a W-2 email phishing scam. The scam was launched in 2016 but has been expanded this year, according to the bulletin, which can be read here.

The bulletin warned that cybercriminals employ a number of spoofing techniques to create an email that appears to originate from an organization’s executive. The email is sent to employees in human resources and payroll departments, requesting a list of employees and their W-2 forms. These forms, of course, contain identifying information including addresses and Social Security numbers.

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Last year, the scam targeted the corporate sector, but this year, the scam appears to be spreading to school districts as well as nonprofit and tribal organizations. Another twist is that the cybercriminals may follow with emails requesting wire transfers. Some companies have lost funds in addition to sensitive information. Some organizations report having received these emails in 2016 and 2017.

The IRS memo urges employers to be vigilant and to share this information with their payroll, finance and human resources departments. Organizations should report incidents to phishing@irs.gov with a subject line of “W2 Scam” and should file a complaint with the Internet Crime Complaint Center (IC3).

Individuals whose W-2 forms have been stolen should take the actions set out in www.identitytheft.gov or www.irs.gov/idenditytheft.  They should also file a Form 14039, Identity Theft Affidavit, if a tax return is rejected because of a duplicated Social Security number.

IRS Commissioner John Koskinen said, “This is one of the most dangerous email phishing scams we’ve seen in a long time. It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme.”