Posts Tagged: ‘income tax identity theft’

Scam of the day – February 3, 2016 – Online tax preparers hacked

February 3, 2016 Posted by Steven Weisman, Esq.

Online tax preparation company TaxAct has notified 450 of its customers that their accounts were accessed by unauthorized third parties between November 10, 2015 and December 4, 2015.  As a result of this unauthorized access, these customers’ formerly filed income tax returns were electronically taken by the hackers who were able to get their victims’ names, Social Security numbers, drivers’ license numbers and bank account information.  This information can be utilized by identity thieves for purposes of income tax identity theft.  The problem does not appear to have been as much a security breach by TaxAct as a lack of taking proper security precautions by their customers because the accounts were accessed through usernames and passwords stolen from other sources and then used to attack the victims’ accounts with TaxAct.  This is a major problem when people use the same username and password for multiple accounts.  If your security is breached at one company, your safety everywhere is threatened.  TaxAct also as a precaution froze the accounts of approximately 9,000 of its customers and informed them by email that in order to access their accounts this year, they will need to provide additional verification.

A few days ago, just a week after TaxAct’s customers were notified of the data breach, TaxSlayer, another online tax preparation company was also targeted by hackers, but no accounts were compromised.  One reason for this is that TaxSlayer requires further verification if someone attempts to log into their account at TaxSlayer from a different computer than the one used to initially set up the account.  This simple security measure can go a long way toward protecting online taxpayers from income tax identity theft.

TIPS

First and foremost, everyone should use a unique password for each and every online account that you have.  It is not that difficult to do.  In addition, whenever you can use dual factor authentication, you should take the opportunity to do so.  With dual factor authentication, you receive a one time code by way of your smartphone each time you go to your online account.  Although this may seem like an inconvenience.  It is extremely useful and not terribly time consuming.

January 30, 2016 – Steve Weisman’s latest column for USA Today

January 30, 2016 Posted by Steven Weisman, Esq.

Here is a link to an important column I wrote for USA Today that tells you about what the IRS and Congress are doing (and not doing) about income tax identity theft.

http://www.usatoday.com/story/money/columnist/2016/01/30/what-irs-isnt-telling-you-identity-theft/79306984/

Scam of the day – January 30, 2016 – Massachusetts lawyer convicted of income tax identity theft

January 30, 2016 Posted by Steven Weisman, Esq.

Attorney R. David Cohen was recently convicted of sixteen charges related to an income tax identity theft scam he operated since 2011 which provided Cohen and his accomplices a million dollars of fraudulent federal income tax refunds.  As is typically the case, Cohen used stolen names and Social Security numbers to file income tax returns and had the refund checks sent to various addresses he controlled. The checks were then attempted to be laundered through his attorney escrow account.  One of the interesting aspects of this case was that Cohen used Social Security numbers of citizens of Puerto Rico which are particularly valuable to income tax identity thieves because although citizens of Puerto Rico are American citizens, they are not required to file federal income tax returns.  This makes it easier for identity thieves to avoid detection as the people whose Social Security numbers they steal don’t file their own returns and thereby alert the IRS that  crime had been committed.  Cohen is scheduled to be sentenced on April 26th.

TIPS

Along with protecting the privacy of your Social Security number as best you can, the best thing you can do to protect yourself from becoming a victim of income tax identity theft is to file your income tax return as soon as possible in order to get your return filed first before an identity thief has an opportunity to do so.

Scam of the day – January 8, 2016 – Income tax identity theft indictments

January 8, 2016 Posted by Steven Weisman, Esq.

The Department of Justice recently announced the indictment of Nakeisha Hall, Jimmie Goodman and Abdulla Coleman on charges related to income tax identity theft by which the defendants are accused of filing phony federal income tax returns and receiving more than a million dollars in bogus refunds over a three year period.  Hall, worked as an IRS employee ironically in the Taxpayer Advocate Service which is a section of the IRS that helps taxpayers with problems.  Instead, she is accused of creating problems for taxpayers by improperly using her access to IRS computers to obtain the names and Social Security numbers of taxpayers and using that information to electronically file phony income tax returns with counterfeit W-2s to receive fraudulent refunds.  The refunds were paid by way of debit cards and sent to addresses that Hall controlled.  In other cases, when checks were issued for the refunds, she again had them sent to addresses controlled by her and forged the identity theft victims’ signatures to cash the checks.

TIPS

Try as it may, the IRS is having a difficult time stopping income tax identity theft by which an identity thief steals your personal information and files a phony income tax return using your name and gets a refund.  Along with protecting your personal information, particularly your Social Security number as much as you can, the best thing you can do to avoid becoming a victim of income tax identity theft is to file your income tax return early.  Income tax identity theft can only work when the criminal is able to file an income tax return using your name and Social Security number before you file your own legitimate income tax return so consider filing as early as possible.

Scam of the day – January 3, 2016 – Congress passes law that will increase identity theft

January 3, 2016 Posted by Steven Weisman, Esq.

Mark Twain once said that the opposite of “progress” was “Congress” and it is hard to disagree with him when you consider the law recently passed by Congress requiring the IRS to use the services of private collection agencies to collect outstanding taxes.  This law is flawed on many levels including, as was pointed out by the IRS Taxpayer Advocate Service, the fact that this program not only had been tried unsuccessfully twice previously, but also actually is not cost effective.  But from my perspective, perhaps the greatest problem with this new law is that it increases the likelihood of scammers being able to pose as tax collectors and lure unsuspecting victims into paying these scammers money.

During the last two years, the Treasury Inspector General for Tax Administration received more than 736,000 complaints by people about telephone calls received from scammers posing as IRS agents attempting to collect overdue taxes.  The Treasury Inspector General also noted that approximately 4,550 victims paid more than 23 million dollars to criminals using this scam and this figure is probably low.  Until now, it was easy to know if the person calling you attempting to collect an overdue tax bill on behalf of the IRS was legitimate.  If you received a call, it was a scam.  The IRS does not initiate attempts to collect overdue taxes by telephone.  Now, however, collection agencies will actually be calling on behalf of the IRS to collect overdue taxes making it very difficult to know if the call you receive is legitimate or not.

TIPS

As I have often said, whenever you get a phone call, you can never be sure who is really on the other end of the line.  Even your Caller ID can be fooled by a technique called Spoofing by which it can be made to appear that your call is coming from someone other than the real caller.  It is for this reason that I advise you never to give out personal information such as your Social Security number or credit card information to anyone who calls you on the phone unless you have absolutely confirmed that they are legitimate.  In the case of a call from someone purporting to be collecting a debt on behalf of the IRS, you should not give them any information or agree to do anything on the phone.  Ask them to send you written information about the alleged debt and then call the IRS to find out if the debt is legitimate or not.

Steve Weisman’s latest column from USA Today

November 14, 2015 Posted by Steven Weisman, Esq.

Here is a link to Steve Weisman’s latest column from USA Today about income tax identity theft

http://www.usatoday.com/story/money/columnist/2015/11/14/weisman-tax-identity-theft/75303596/

Scam of the day – November 7, 2015 – IRS takes new steps to reduce income tax identity theft and still misses the boat

November 7, 2015 Posted by Steven Weisman, Esq.

Income tax identity theft by which identity thieves file an income tax return using the Social Security number of their victim and get a substantial income tax refund based on a counterfeit W-2 is a huge problem that is only getting worse.  It cost the federal government and, as a result, we the taxpayers 6.5 billion dollars in 2013.  Recently, however, the IRS announced a new cooperative effort between the IRS, state tax administrators and private tax preparation leaders.  Included among the steps being taken are review by the IRS of the IP address of computers filing income tax returns to identify computers filing multiple returns and reviewing the time it takes to complete an electronic income tax return which can also help identify fraudulent returns since completing a fraudulent return generally takes less time than a legitimate return.  In addition, income tax preparation software companies will be using enhanced validation protocols including increased use of security questions.

However, all of these steps which are expected to cost taxpayers an additional 281 million dollars to implement totally miss the point.  The easiest and simplest way to dramatically reduce income tax identity theft still is not being done by Congress, namely changing the laws regarding employers filing of W-2s.  Under present law, for the upcoming tax filing season, employers must file W-2s with the federal government by February 29th if they file paper W-2s and as late as March 31st if they file, as so many do, electronically.  Unfortunately Congress in its infinite wisdom requires these W-2s to be filed with the Social Security Administration (SSA) by those dates.  The SSA does not send the W-2s to the IRS until July so the IRS does not get around to matching the W-2s filed by employers with those filed by individual taxpayers with their income tax returns until months after the IRS has already sent a refund based on the W-2 filed by the taxpayer or identity thief.  In order to dramatically reduce income tax identity theft, all Congress has to do is merely require employers to file W-2s with the IRS instead of waiting for the SSA to send them to the IRS.  It also would make much more sense than Congress appears to have to require the IRS to match those employer filed W-2s with those filed by individual taxpayers BEFORE sending out a refund in order to easily identify counterfeit W-2s.  For years Congress has been advised to make these simple changes, but it still fails to do so.

TIPS

As for we as individual taxpayers, what can we do to reduce our chances of becoming a victim of identity theft?  Of course, protecting the privacy of your Social Security number is extremely important, but with so many data breaches at companies that have this information, this is somewhat outside of our control.  However, what we can do is to file our income tax returns as early as possible.  In order for an identity thief to make you a victim of income tax identity theft, he needs to file an income tax return using your Social Security number before you file a return.  If it is filed after you have filed a return, it is too late for the identity thief to claim a refund using your information.

Scam of the day – August 31, 2015 – Jason Chaffetz becomes a victim of income tax identity theft

August 31, 2015 Posted by Steven Weisman, Esq.

Unless you live in Utah, the name of Jason Chaffetz may not be familiar to you.  Jason Chaffetz is a Congressman from Utah, the Chairman of the House Oversight Committee and a recent victim, as he disclosed this week, of income tax identity theft.  Chaffetz did not find out he was a victim of income tax identity theft until he went to file his income tax return only to be told that someone else had filed using his name and Social Security number.  Fortunately for Chaffetz he owed money to the IRS so the fact that he is a victim of income tax identity theft will not delay the payment to him of a refund.  Those victims of income tax identity theft who are owed a refund find insult added to injury as they must wait many months before the IRS completes its investigation and sends a refund.  Chaffetz has long been a critic of IRS Commissioner John Koskinen and this latest matter has only added to the reasons Chaffetz is using in asking for Koskinen to be fired.

TIPS

Although Congressman Chaffetz is  rightfully placing much of the blame for income tax identity theft on Commissioner John Koskinen, there is plenty of blame for income tax identity theft on the part of Congress itself which continues to fail to pass legislation to require employers to file W-2s with the IRS at the same time they file them with the Social Security Administration.  Presently, employers file W-2s for their employees with the Social Security Administration either at the end of February or March depending on whether they are filing electronically or by paper.  The Social Security Administration does not get around to sending the W-2s to the IRS until July, long after the IRS has already sent out refunds to many income tax identity thieves who filed counterfeit W-2s.  If the IRS received W-2s early and compared them to the W-2s filed with income tax returns before sending out refunds, a tremendous amount of income tax identity theft could be avoided.  As for what we as taxpayers can do to protect ourselves from income tax identity theft, the best things you can do are to keep your Social Security number private and file your income tax return early before an identity thief files one before you do.

 

Steve Weisman’s latest column for USA Today

August 29, 2015 Posted by Steven Weisman, Esq.

Here is  a link to Steve Weisman’s latest column for USA Today.

http://www.usatoday.com/story/money/personalfinance/2015/08/29/irs-income-tax-identity-theft/71325656/