Taxes & Identity Theft

Last week my YouTube team put together another episode in our tax tips video series. In the new video embedded below, host Edward Lester explains taxes and identity theft. If you enjoy the new episode then be sure to visit my YouTube channel for our archive of tax tip videos.

Taxes and Identity Theft

Last week, the RDTC Tax Help Blog posted a new article on tax related identity theft. You can find a section of the article below, or click here to view the full text.

Now that tax season is here, people across the country are worrying about getting their tax return prepared and filed with the IRS. However, there is another issue that taxpayers have to worry about: tax-related identity theft. Fortunately, you can prevent becoming an identity theft victim by following a few instructions. The good news is, even if your identity is stolen the IRS will work with you to resolve the matter as quickly as possible.

Increased Risk

A few years ago, Nina Olson, the National Taxpayer Advocate made the startling revelation that between 2004 and 2007, the number of tax-related identity theft problems rose by 644%.

Erroneous Returns or Stolen Refunds

If you get a notice from the IRS indicating that more than one return was filled using your social security number (SSN), you will want to contact them immediately to find out if you are a victim of identity theft. Using erroneous returns, thieves can obtain refunds from the IRS in your name, a common tactic used by tax scammers. The IRS will work with you to resolve the problem, but it is important to contact them as soon as possible.

Continued at RDTC.com…

IRS Alerts Public to New Identity Theft Scams

The IRS has recently become aware that a handful of new tax scams have popped up using their official logo, name, and even website URL to trick taxpayers into believing they are dealing with a federal agency. Unfortunately, after being fooled these taxpayers will have their identities stolen, which can quickly turn into an expensive mistake. To help American taxpayers the IRS has put out this new press release with details on these new scams, and advice on how to avoid them. Since their article is so in-depth and informative, I wanted to make sure all of my readers had a chance to learn from it. Check out details of the various scams the IRS is warning about below.

Making Work Pay Refund

This phishing e-mail, which claims to come from the IRS, references the president and the Making Work Pay provision of the 2009 economic recovery law. It says that there is a refundable credit available to workers, consumers and retirees that can be paid into the recipient’s bank account if the recipient registers their account information with the IRS. The e-mail contains links to register the account and to claim the tax refund.

In reality, most taxpayers receive their Making Work Pay tax credit, which was designed for wage earners, in their paychecks as a result of decreased tax withholding, not as a lump sum distribution from a federal fund. Additionally, consumers and retirees who are not wage earners are not eligible for this tax credit.

Inherited Funds / Lottery Winnings / Cash Consignment

In this phishing scheme, recipients receive an e-mail claiming to come from the U.S. Department of the Treasury notifying them that they will receive millions of dollars in recovered funds or lottery winnings or cash consignment if they provide certain personal information, including phone numbers, via return e-mail. The e-mail may be just the first step in a multi-step scheme, in which the victim is later contacted by telephone or further e-mail and instructed to deposit taxes on the funds or winnings before they can receive any of it. Alternatively, they may be sent a phony check of the funds or winnings and told to deposit it but pay 10 percent in taxes or fees. Thinking that the check must have cleared the bank and is genuine, some people comply. However, the scammers, not the Treasury Department, will get the taxes or fees.

Form W-8BEN

In this scam, fraudsters modify a genuine IRS form, the W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, to request detailed personal and financial information. This could include nationality, passport number, bank account and PIN numbers, spouse’s name and mother’s maiden name, or other personal or financial information or security measures for financial accounts. The scammers may use the genuine form number and name or may make up a new form number, such as W-4100B2.

They either e-mail or fax the form or letter. If only a letter, the letter itself contains the request for the personal and financial information. The letter, which claims to come from the IRS, states that the recipient will face additional taxes unless he or she quickly faxes the required information to the number provided by the scammer.

In reality, taxpayers file the genuine Form W-8BEN with their financial institutions, not with the IRS. Additionally, the genuine W-8BEN does not request the taxpayer’s passport number, bank account number, security or similar information.

NY Tax Worker Accused Of Stealing Ids, $200K

A former NY tax worker has been accused of stealing identities, and making $200,000 in fraudulent charges, reports Forbes.com via The Associated Press. You can find a segment of the story below, but the full text can be found here.

A former New York state tax department worker is accused of stealing the identities of taxpayers and running up more than $200,000 in fraudulent charges on their accounts.

Prosecutors say the confidential information gathered by Walter Healey included credit card and Social Security numbers. The illicit charges are dated between 2006 and 2008.

Healey faces four counts of identity theft, as well as unlawful possession of personal identification, tampering with public records and misconduct charges.

The 63-year-old Troy resident, who says he's retired and last worked in October, pleaded not guilty Wednesday. He and his lawyer, George LaMarche (La-marsh), declined further comment. A judge set bail at $5,000.