Five ways crooks try to rip us off in tax season
Oh, for the days when tax tips were as simple as double-check your math and sign your return. Now, we must keep an eye out for tax-related scams, too.
Fraudsters aren't just hitting us with robocalls claiming to be from the Internal Revenue Service. They're pretending to "help" you file returns, crafting fake returns to generate huge refunds, and even targeting tax professionals.
Here's a look at five hot scams this tax season:
1. Beware of the phony help desk
Con artists can hide behind phone calls or emails and pretend to be from the so-called "help" desk if you turn to your computer to prepare your own taxes.
Don't give out your password, if someone claims to be from the "Tech Support" team.
TurboTax is warning that consumers have received fake emails that look like they're from TurboTax.
Some key phrases: "Thanks for choosing TurboTax. Did you attempt to log in from a new computer? For the security of your account, Kindly Sign in securely the link Below." The wording is odd, skipping words such as "using" the link.
TurboTax said one fake email even claims you're eligible for an "extra refund."
Do not click on any of the links or reply to the suspicious email.
Hint: One can go here to track some scams or www.irs.gov for warnings on potential scams.
No one from the IRS will call to "verify" tax return information over the phone.
2. The W-2 scam is alive and well
Office workers are warned to stay clear of fake emails asking for W-2 forms.
IRS Commissioner John Koskinen called the latest trend “one of the most dangerous email phishing scams we’ve seen in a long time."
The crooks are trying to engineer a massive theft of sensitive personal data that criminals later can use to craft fraudulent tax returns and commit other ID-related crimes.
The IRS said in late January that the W-2 email scam that payroll officials should be alert for spoofed emails that might contain the actual name of company chief executive officers.
How the scam works: Cyber crooks send out legitimate-looking emails that appear to be from top bosses at a company and request a list of employees and information, including Social Security numbers.
Some key phrases used in the spoofed emails: "Kindly send me the individual 2016 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review." Or, "I want you to send me the list of W-2 copy of employees wage and tax statement for 2016, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me ASAP."
What's worse: The IRS said in early February that the crooks use a follow up "executive" email and ask that thousands of dollars be sent via a wire transfer from the company coffers to a specific account elsewhere.
3. The fraudster files first
Con artists – who have your ID information, including Social Security numbers – file early in the season to beat legitimate taxpayers to the punch. It doesn't matter if you're owed a refund or not. The crook files a fake tax return using generous tax credits to game the system.
If a crook files first, your tax return will be rejected when you try to file it electronically. Given that, it's best to file as soon in the season as you can.
You'd need to file IRS Form 14039 to alert the IRS if you've discovered that another tax return has been filed with your Social Security number.
When the IRS stops a suspicious filing, they may send a 5071C letter asking that you verify your identity.
4. Cyber criminals are going after tax professionals, too
More frequently, fraudsters and hackers are setting their sights on tax practitioners, according to the Tax & Accounting Blog from Thomson Reuters.
How the latest scam works: An email is disguised as an alert from a tax client, a potential client or even a tax software vendor. One scam claims the client has uploaded the tax organizer files to their portal. But if the staff clicks the OPEN link in the email, they're taken to a website that looks like a login screen from the vendor. Here's where the fraudsters capture login and password information.
George W. Smith IV, a Southfield-based accountant, said he's received phishing emails labeled "client referral” and “Are you taking on new clients?” One email said "Jennifer" had recommended the firm.
Smith said he also was sent an email by a customer service representative for a software company and the sender said the attached documents needed to be reviewed.
Smith said he did not open any of those attachments. But he later learned that the software representative said his email had been hacked and malware was attached to his hacked email blast.
5. Does your tax refund seem too good to be true? Maybe it's a phony
Dozens of stories of crooked tax professionals typically hit the headlines across the country in January, as the federal government tries to warn tax filers about a variety of schemes.
In January, for example, the U.S. Department of Justice filed a lawsuit to shut down Tax Pioneer. The suit seeks to permanently bar the owner, Dieasha Davis, and Tax Pioneer from preparing federal tax returns for others.
The federal government's civil complaint alleges that the defendants intentionally reported false information on tax returns prepared for clients to generate higher refunds. The complaint stated that from 2013 to 2016, Tax Pioneer prepared and filed more than 2,800 federal income tax returns with the IRS. More than 94% of those tax returns claimed a tax refund, according to the complaint.
Allegedly, the defendants reported fake businesses in some cases. The complaint referred to a 77-year-old tax filer with no job but whose return listed a fictitious "Home Health Housekeeping” business that generated more than $9,500 in gross receipts and more than $1,000 of expenses in order to fraudulently claim the Earned Income Tax Credit to generate a refund exceeding $2,800. The client, according to the complaint, said she never told the preparer she operated the business.
Mark C. Milton, an attorney for Husch Blackwell in St. Louis who is representing Davis, said the firm continues to operate and maintains that the allegations are without merit. He noted that in at least one example a business exists where the government claimed it was a fictitious company.
Ultimately a taxpayer bears the full responsibility for the tax return that they submit. The IRS said about 60% of taxpayers use tax professionals to prepare their returns.
"Well-intentioned taxpayers can be misled by preparers who don’t understand taxes or who mislead people into taking credits or deductions they aren’t entitled to in order to increase their fee," the IRS said.
In general, the IRS said tax filers should avoid tax professionals who base fees on a percentage of their client’s refund or boast bigger refunds than others. The IRS has an online directory of preparers with credentials.
MORE FROM SUSAN TOMPOR:
IRS has begun accepting tax returns: 6 things early filers need to know
H&R Block teams with IBM Watson to tackle tax returns
Can you hear me? What matters is phone fraudsters hear you
Contact Susan Tompor: stompor@freepress.com or 313-222-8876. Follow Susan on Twitter @Tompor.