Search results for: tax identity theft

Tax identity theft continues to be a significant problem for taxpayers. Tax identity theft occurs when criminals use the personal information of individuals and file fraudulent tax returns before the taxpayer does, requesting a refund. When the real taxpayer files his or her tax return, the IRS kicks it back, explaining that it has already been filed. It has happened to me, and it is a nightmare.

Although tax identity theft cases have declined over the years, due in part to IRS process changes and enhanced security, it remains a huge issue, and now is the time of year that it happens. Taxpayers should be on high alert. It continues to be such a problem that the Federal Trade Commission (FTC) designates this week tax as Identity Theft Awareness Week each year. That is so sad.

Nonetheless, the FTC does a good job of getting the word out, providing information to tax payers about the issue, and offering resources for individuals on their risk, how the fraud happens, and how you can protect yourself and recover if it happens to you.

To access these free resources, go to www.ftc.gov/taxidtheft.

This week is National Consumer Protection Week. In celebration of that, this post is devoted to protection from tax identity theft.

At this time of year, as we all prepare and file our tax returns with the Internal Revenue Service (IRS), we are reminded again that tax identity theft continues to be a problem. Tax identity theft occurs when a criminal has either purchased or obtained your personal information and files a false tax return in your name to get a refund from the IRS. Then when you file your taxes, you get a notice that your tax return has already been filed and your refund issued. The problem is that you didn’t file your tax return and get the refund, the criminal has. If you are a victim, there are a number of things you must do to prove who you are in order to file your real tax return, and to rectify the fraud. It is a time consuming and rather irritating process,caused by this criminal act.

We have written about tax identity theft before in more detail, so click here for more information.

We also note that the Federal Trade Commission is hosting a twitter chat tomorrow, March 8, 2019 at 11 a.m. EST with the Identity Theft Resource Center to discuss protecting yourself against tax identity theft. Here is the information if you want to join the conversation: https://twitter.com/FTC; or https://twitter.com/ITRCSD.

You can also follow along using the #NCPW2019 hashtag.

Who knew—but yes, next week is Tax Identity Theft Awareness Week. How sad is it that we have to have a week devoted to education and awareness on this topic?

It’s tax season (“busy season” as my CPA friends call it), and prime time for identity thieves to reap millions in fake and fraudulent tax returns as they have done in the past.

To combat this widespread and serious problem, the Federal Trade Commission (FTC) has dubbed the week of January 29 – February 2, 2018 as “Tax Identity Theft Awareness Week,” and has announced a number of free webinars, Twitter chats and helpful information to prevent tax identity theft, and resources in the unfortunate event you become a victim of tax identity theft.

The FTC resources can be accessed here.

Here is a schedule of events so far:

  • January 29, 2 p.m. EST — The FTC and the Identity Theft Resource Center co-host a webinar for consumers about tax identity theft, IRS imposter scams, how to protect yourself, and recovery steps for victims.
  • January 30, 2:30 p.m. EST — The FTC, AARP Fraud Watch Network, AARP Foundation Tax-Aide program, and the Treasury Inspector General for Tax Administration invite consumers to a webinar about tax identity theft and IRS imposter scams.
  • January 31, 11 a.m. EST — The FTC and the Department of Veterans Affairs co-host a Twitter chat for service members, veterans, and their families about minimizing your risk of tax identity theft and recovering if you’re a victim.
  • January 31, 1 p.m. EST — The FTC, the Department of Veterans Affairs, and the Treasury Inspector General for Tax Administration discuss tax identity theft, IRS imposter scams, and what to do if you become a victim. This is a closed webinar for Veterans Administration employees, patients, and contractors.
  • February 1, 1 p.m. EST — The FTC and IRS offer a free webinar for small businesses about tax identity theft, imposter scams that target businesses, cybersecurity, data breaches, and free resources for your business, employees and customers.
  • February 1, 3 p.m. EST — The FTC and the Identity Theft Resource Center invite consumers to join a Twitter chat about tax identity theft, its warning signs, and what to do if it happens to you.

In addition, the FTC has published these tips to fight tax identity theft:

  • File your tax return early in the tax season, if you can.
  • Use a secure internet connection if you file electronically, or mail your tax return directly from the post office.
  • Respond to all mail from the IRS as soon as possible.
  • If tax identity theft happens to you, visit IdentityTheft.gov to report it to the FTC, file an Identity Theft Affidavit with the IRS electronically, and get a personal recovery plan.

We all have to file our tax returns, but following these tips may protect you from tax identity theft while you do so.

In another round of warnings from the federal government on protecting yourself from tax return fraud and identity theft, the Internal Revenue Service (IRS) has issued its 2019 “Dirty Dozen” Campaign, designed to warn individuals about the most common tax-related phishing schemes that are focused on tax fraud and identity theft.

During tax season, cyber criminals work around the clock to locate and dupe consumers into giving them information they need in order to file false tax returns. The schemes can happen over the telephone, via text messages, websites, or email.

The first of the Dirty Dozen is a warning about the highest threat – phishing.  Phishing emails look very real and use the IRS’ logo and threatening language designed to scare the recipient into giving personal information. The email or telephone call appears to be from someone from the IRS, threatening legal action or fines if you don’t pay taxes due. They are usually urgent and require the recipient to make a split-second decision.

A new twist on phishing campaigns this year was one targeted at tax preparers and professionals. The campaign against these professionals obtains the personal information of the professional’s clients, fraudulent tax returns were filed in their names, paid the refunds to the scammers, and then the scammers contacted the taxpayers posing as a debt collector acting on behalf of the IRS to get the refund back.  Very clever.

The IRS also warned payroll offices and human resources departments that they should be on high alert for phishing emails requesting W-2 forms of employees, which the scammers use to file false tax returns seeking refunds. According to the IRS, variations of these schemes include requesting changes to an employee’s direct deposit information (which should always be verified directly with the employee), payment of fake invoices, or requests for wiring instructions to a new or different account.

The IRS requests that anyone who has become the victim of any of these schemes report it to phishing@irs.gov. It reminds people that the IRS generally does not email or call individuals regarding their taxes, and to be on high alert for any calls or emails claiming to be from the IRS.

We have frequently reported about how devastating and widespread tax fraud is in the U.S.—in the past affecting hundreds of thousands of U.S. taxpayers [view related privacy tip]. Income tax preparers are at risk for cyber intrusions because they hold highly sensitive personal information of their clients, which can be used by criminals to commit tax fraud and identity theft.

Virginia became the first state in the nation to amend its data breach law to specifically require signing income tax preparers to notify the Virginia Department of Taxation if they discover or are notified of a breach of taxpayer information, including “return information,” which covers all of the information found on a tax return.

Tax preparers are required to provide notice to the Department without unreasonable delay. We expect that other states will follow Virginia’s requirement due to the highly sensitive nature of the personal information held by income tax preparers, and the consequences to taxpayers in the event of a cyber intrusion and theft of the tax information of individuals.

It is one thing to steal our identity as an adult, but children are defenseless against this type of fraud. According to Experian, it handles 25,000-30,000 cases of identity theft and fraud every year and a whopping 17 percent affected children and the estimate is that it will affect up to 25 percent of children before they reach the age of 18. That is a disturbing statistic.

According to Michael Bruemmer of Experian, children can be targeted at birth when parents apply for Social Security numbers at the hospital, and children are vulnerable because most don’t have a credit file and aren’t checking their credit report.

Warning signs for parents to pay attention to include:

  • A child receiving a credit card offer in the mail that wasn’t requested
  • Receiving an IRS notice of delinquent taxes in the child’s name
  • Collection calls regarding unpaid bills for products or services

Tips for parents to use on protecting their children’s identity include:

  • Teach your children not to give their personal information to anyone
  • Monitor and teach your children the importance of being careful about sharing their personal information on line or on social media sites
  • Get a copy of your child’s credit report and monitor your child’s credit like you monitor your own
  • Push back on people and don’t allow your child’s Social Security number or other personal information to be shared with anyone who doesn’t have a need to have it (even if there is a blank on the form asking for a SSN, ask why and refuse to give it)
  • Teach your children the importance of their SSN and personal information and to keep it safe

Help your children combat identity theft and protect them from being one of the 25 percent who will be victims before they are 18.

In the wake of several recent high-profile security breaches, employers are increasingly viewing identity theft protection as an essential employee benefit for employees. According to Willis Towers Watson’s 2016 voluntary benefits and services (VBS) survey, identity theft protection, offered by 35 percent of employers in 2015, could double to nearly 70 percent by 2018. Recognizing the changing needs of the workforce, employer-provided identity theft protection typically includes some form of coverage for financial losses (which can include lost wages) as well as case management services for victims of identity theft.  Continue Reading Federal Tax Treatment of Employer-Provided Identity Protection Services

Just when I thought everyone knew about the continued W2 schemes, where phishing emails are used to get company employees’ W2 forms so the thief can file a false tax return and get a refund, several additional clients have been hit with the scheme and the thieves were successful.

Just like after holiday sales in retail stores, it is common now that after the holidays, there is an uptick of identity theft and tax fraud schemes as tax season looms upon us.

My tip this week is to re-educate all of your employees on the dangers of phishing emails and providing sensitive data of employees, (such as W2 forms) to criminals impersonating the CEO or head of the entity. It is happening every day, and will continue to be a problem in the next few month. If your boss or CEO asks for W2 forms, go into his or her office face to face and ask him or her why. If you can’t got into the office and ask face to face, then pick up that phone on your desk and call him or her. Stop relying on email for instructions in this area.

Further, put procedures in place that will thwart any phishing attack requesting sensitive data of employees. And finally, continually provide support to personnel so they feel comfortable to ask questions when their gut tells them something is off.

Since tax identity theft continues to be such a problem, the Federal Trade Commission (FTC) is hosting “Tax Identity Theft Awareness Week” next week (January 30-February 3). It will host a series of events designed to assist consumers and businesses on ways they “can minimize their risk of tax identity theft, and recover if it happens.”

Check out the FTC’s website for a list of events and listen in and learn—they are free! Stay vigilant and protect yourself and your employees from tax identity theft.

Nakeisha Hall was sentenced in federal district court in August to serve nine years and two months in prison after she plead guilty for crimes she committed while working for the IRS Taxpayer Advocate Service. Instead of advocating for taxpayers, she actually used taxpayers’ personal information to commit fraud and identity theft against them.

Her job was to help taxpayers who were victims of identity theft, but in fact, she used their information in a tax-fraud scheme with three others that netted them $1.5 million after filing false tax returns. She stole taxpayers’ identities through unauthorized access to IRS computers and then filed the false tax returns.

She reported to prison on September 13, 2016. In sentencing her, the Judge stated “This is one of the most extensive tax fraud schemes I’ve ever seen.” The judge also commented that although she was entrusted to help taxpayers who had already been victims of fraud, “Instead you preyed on them and victimized them again.”

After serving her prison sentence, she will then undergo five years of supervised release.

We have written before about the ability of hackers to file false tax returns to get fraudulent refunds by using the IRS website, and how hundreds of thousands of Americans have become victims of tax fraud.

The IRS issued a statement last week warning tax preparers to be on the alert for hackings that allow criminals to hack into the tax preparer’s system by using remote technology, then use the tax preparer’s credentials to file a false tax return on behalf of his/her clients. The IRS indicated that it was aware of more than two dozen incidents in the past several weeks when false tax returns were filed through tax preparers’ hacked systems.

The IRS warning came right on the heels of the Treasury Inspector General for Tax Administration’s audit report of the IRS which showed that almost 1.1 million taxpayers were victims of employment related identity theft between February 2011 and December 2015.

The Inspector General’s Report further found that 621,000 taxpayers were actually affected by tax fraud, and that 355,000 taxpayers’ accounts were actually breached by unauthorized individuals.

Your tax preparers have all of your most valuable personal information that can be used to commit fraud if it gets into the wrong hands. Many tax preparers are solo or small companies, which may not have the most sophisticated data security measures, and yet they have very valuable data.

Whether you use a tax preparer to file taxes on a quarterly or yearly basis, it is a good idea to check with your tax preparer now (before they get into their busy season), particularly with the IRS warning, to make sure s/he has “all available security measures on their tax preparation software.” Send this blog post on to your tax preparer and ask him/her to confirm that s/he has a robust security program in place to protect your personal information, including security measures to prevent the system from being taken over remotely.