Posts Tagged: ‘income tax identity theft’

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/

 

Scam of the day – August 29, 2015 – Class action filed against IRS for data breach

August 29, 2015 Posted by Steven Weisman, Esq.

The trend of people suing companies and government agencies deemed responsible for data breaches due to their failing to take proper steps to protect personal information they hold continues to accelerate with the recent filing of a proposed class action on behalf of the approximately 330,000 people affected by the recent data breach of the IRS’ Get Transcript program about which I have reported to you a number of times here at Scamicide.  Go to the Archives for more information about this particular data breach.  According to Richard McCune, one of the lawyers who filed the lawsuit, “As custodians of taxpayer information, the IRS has failed in its obligation to protect the personal and sensitive information of hundreds of thousands of taxpayers, their spouses and families.  Furthermore, the breach and theft occurred after repeated warnings over the course of several years regarding the lax computer security system.”

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If you were affected by this data breach and want more information about the lawsuit, you can contact McCuneWright, one of the law firms that filed the lawsuit by clicking on this link.  http://www.mccunewright.com/contact.php

As for the rest of us, the best things you can do to protect yourself from  income tax identity theft is to protect the privacy of your Social Security number and file your income tax return as early as possible to prevent an identity thief from filing one using your name and Social Security number before you get a chance to file your legitimate return.

Scam of the day – August 19, 2015 – IRS hacking worse than originally reported

August 19, 2015 Posted by Steven Weisman, Esq.

Earlier this week, the IRS announced that the hacking of its “Get Transcript” program, which they had originally announced in May and which was the subject of my Scam of the day for May 28th was far worse than they originally disclosed.  While originally, the IRS stated that 104,000 people were affected by the IRS data breach, now the IRS is saying that the number of people affected is more than 300,000.  As a result of the data breach, the IRS indicated it paid more than 50 million dollars in fraudulent returns filed using the information stolen from the IRS’ “Get Transcript” program.  The”Get Transcript” program enables taxpayers to get copies of their federal income tax returns from previous years.  People often use this service to get copies of earlier income tax returns for uses such as when they apply for a mortgage or financial aid for college.  The IRS shut closed this service when it became aware that vulnerabilities in the system resulted in hackers attacking the system from mid February until May posing as legitimate taxpayers and getting copies of  income tax returns which could provide information that would enable the hackers to steal the identities of their victims and file phony income tax returns in the names of their victims and claim bogus refunds.

Although many people were surprised at this hacking, Scamicide readers were not among them because here at Scamicide, we exposed this vulnerability in the “Get Transcript” program in our Scam of the day for April 3, 2015.  Apparently, the IRS doesn’t read Scamicide.  Maybe it should.

The problem with the system was in the authentication process used by the IRS to limit access to this information to the taxpayer who is seeking his or her own income tax returns.  In order to access the income tax returns, the system required the inquirer to provide his or her name, Social Security number, birth date, address and other personal identity verifications, such as what was your high school mascot or when you got a mortgage. The problem is that, in many instances, this information can be gathered by a diligent hacker from public data bases, social media where people provide this information to hackers, and data breaches.

TIPS

If you are one of the people affected by this data breach, you will get a letter, not an email, from the IRS and will be offered free credit monitoring services.  These letters will not require you to provide any personal information in response.  Any communication you get that purports to be from the IRS that requests that you provide personal information is not from the IRS, but from another scammer.

A lesson for all of us is to remember to try to protect the privacy of your Social Security number as best you can.  Most identity theft starts with the identity thief obtaining and exploiting the victim’s Social Security number.  Don’t provide it to companies with which you do business unless you absolutely must do so.  Medical care providers routinely ask you to provide this, but they have no need for this and the health care industry has been among the worst in protecting its data from being hacked.

The verification process of using personal identity verification information is fundamentally flawed in today’s world.  Better systems should be used, such as dual factor authentication where a code is sent to your smartphone when you need to access an account.

Scam of the day – August 18, 2015 – 32 gang members indicted for income tax identity theft

August 18, 2015 Posted by Steven Weisman, Esq.

A good indication as to how pervasive income tax identity theft has become is the recent indictments filed in California against 32 members of the Long Beach gang called the Insane Crips.  Among the charges were 299 counts of identity theft.  Filing income tax returns using names and stolen Social Security numbers of their victims, the gang managed to obtain more than 3 million dollars in refunds loaded on to prepaid debit cards, which is an option offered by the IRS.  The fact that young, unsophisticated gang members are able to steal this much money from the IRS filing fraudulent income tax returns is a good indication of how easy this crime is to accomplish.

TIPS

The best place to find a helping hand is always at the end of your own arm.  Do not depend on the IRS protecting you from income tax identity theft.  Protect the privacy of your Social Security number as best you can and file your income tax return as early as possible so that an identity thief cannot file one before you and get a refund before you file your return.  If you are a victim of income tax identity theft, it can take many months before the IRS will complete its investigation of the matter and send you your proper refund.

Scam of the day – August 17, 2015 – New IRS regulation to reduce identity theft is worthless

August 17, 2015 Posted by Steven Weisman, Esq.

Income tax identity theft is a major problem.  It costs the federal government and therefore the legitimate taxpayers an estimated 5 billion dollars per year.  The IRS is fully aware of the problem and therefore has just issued final and temporary regulations  that will go into effect two years from now that remove the automatic thirty day extension of time for employers to file W-2s in an effort to help curb income tax identity theft.  Identity thieves often file their fraudulent income tax returns using counterfeit W-2s that indicate a large refund is due.   Under the law, employers who file paper W-2s must file W-2s on the last day of February and if they file electronically, they must file the W-2s on March 31st, so the new regulations will prevent employers from extending those deadlines automatically to the end of March and end of April depending upon whether the employer is filing W-2s by paper or electronically.

However, the regulation is utterly useless and ineffective because under the present law, when an employer files W-2s, they are not filed with the IRS.  They are filed with the Social Security Administration, which does not get around to forwarding them to the IRS for matching against submitted income tax returns to verify whether or not the W-2 filed with the individual’s income tax return is legitimate until July or August, which is long after the IRS has already sent out refunds without ever matching the W-2s filed by taxpayers with those filed by employers.  The new regulation does not improve the situation at all.  A far better solution would be for Congress to merely enact legislation requiring employers to file their W-2s with the IRS at the same time they file them with the Social Security Administration and for the IRS to match the W-2s filed by employers with those filed by taxpayers before the IRS sends out refunds.  This simple and inexpensive step would dramatically reduce the amount of income tax identity theft.  Congress and the IRS have been advised for years to do this, but they still have done nothing.

TIPS

The best steps you can take to protect yourself from becoming a victim of income tax identity theft are to maintain the privacy of your Social Security number and file your income tax return as early as possible in order to beat an income tax identity thief from filing an income tax return in your name before you do.  Meanwhile, we all should contact our Senators and Representatives to urge them to change the law to require employers to file W-2s with the IRS at the same time they file them with the Social Security Administration and for the IRS to match those W-2s with those filed by taxpayers before sending out refunds.

Here is a link to a website that will provide you with the email addresses of your Senators and Congressmen.  http://www.contactingthecongress.org/

 

 

Scam of the day – July 21, 2015 – National Taxpayer Advocate report criticizes IRS on income tax identity theft response

July 20, 2015 Posted by Steven Weisman, Esq.

The National Taxpayer Advocate (NTA) is an internal watchdog for consumers within the IRS.  Each year the NTA is required to issue two reports.  A few days ago Nina Olson, the National Taxpayer Advocate issued her midyear report and it was not very complimentary in regard to the response of the IRS to victims of income tax identity theft.  Income tax identity theft where an innocent taxpayer’s Social Security number is used by the thief to file an income tax return in the name of the victim claiming a substantial refund based generally upon counterfeit W-2s results in not only losses to the IRS and, by extension the federal treasury, but also causes the victim’s tax return to be flagged and investigated in great detail before the innocent victim finally receives his or her legitimate income tax refund and it is here that the National Taxpayer Advocate found the IRS to be failing.  With present IRS filters, more than 600,000 legitimate returns of taxpayers were screened and frozen as suspicious last year, but the IRS’ programs for completing the investigations of those returns and getting the innocent victims their rightful refunds are seriously lacking.  Only 17% of telephone calls from innocent taxpayers whose tax returns had been frozen as suspicious were even answered and during three consecutive weeks during filing season  this figure dropped to 10%.

In addition, although the IRS has made some progress in assisting the innocent victims of income tax identity theft in getting their legitimate refunds, it still takes, on average, 278 days to resolve the claim of a victim of income tax identity theft although the IRS routinely tells taxpayers that they can expect their claims to be resolved within 180 days.

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So what should you do if you are a new victim of income tax identity theft?    Filing a police report immediately is very important in order to document your claim.  Although this is the era of electronic communications, the next thing you should do is mail to the IRS a paper tax return with an attached Form 14039 Identity Theft Affidavit and the police report.  According to the IRS, this will shave an average of 54 days off the time it takes the IRS to process your claim.   Your case will then be assigned to an IRS employee to assist you with clearing your name and getting your refund. As a victim of identity theft, you also are eligible to receive an Identity Protection Personal Identification Number (IP PIN) to use for future income tax returns to protect you from becoming a victim again of income tax identity theft.  You also should put a credit freeze on your credit report because if someone is able to file an income tax return on your behalf, they have access to your Social Security number which they could also use to access your credit report and obtain credit in your name.  Putting a credit freeze on your credit report will thwart future attempts by an identity thief to access your credit.  You can find information about credit freezes and how to put one on your credit reports at Experian, Equifax and Transunion by going to the Archives section of Scamicide.

Steve Weisman speaks to IRS town meeting about income tax identity theft

July 9, 2015 Posted by Steven Weisman, Esq.

Income tax identity theft continues to be a major problem costing taxpayers 5.8 billion dollars last year and causing tremendous hardship to the individuals whose identities were stolen and used to file fraudulent income tax returns.  Here is a link to a video of a speech given by Steve Weisman to an IRS town meeting of tax preparers and IRS officials.  http://ezwp.tv/V8VcuLNq

Scam of the day – June 15, 2015 – New IRS policies implemented to thwart identity theft

June 15, 2015 Posted by Steven Weisman, Esq.

The good news is that late last week the IRS initiated new policies to help reduce income tax identity theft which costs taxpayers 5 billion dollars per year.  The better news is that the new policies include significant information sharing between private companies such as Intuit, which makes the popular Turbo Tax program which has been utilized by identity thieves to accomplish income tax identity theft and the IRS.  The cooperation and information sharing between the IRS and private companies involved with income tax preparation will aid in the recognition of new forms of identity theft and the development of defenses.

Included among the new policies being implemented are the crosschecking of electronically filed returns with Internet addresses and computer addresses as well as scans that will determine the time it took to complete an online return to help determine when a fraudulent return is being filed.

However the bad news is that Congress still hasn’t taken the most basic step necessary to dramatically reduce  income tax identity theft, namely requiring employers to send W-2s to the IRS directly and in a timely fashion before the IRS sends out tax refunds.  Presently, employers file their W-2s with the Social Security Administration (SSA) in February or March depending on whether the W-2s are filed electronically or on paper.  The SSA does not get around to sending the W-2s to the IRS until late July so that by the time the IRS compares the actual W-2s with the information contained in income tax returns, the IRS has already sent out billions of dollars of fraudulent refunds.  The simple step of requiring companies to file their W-2s with the IRS early in the tax season so that the IRS can compare the real W-2s with the information contained in filed income tax returns before sending out refunds could eliminate a large amount of income tax identity theft.

TIPS

The best way for all of us as individual taxpayers to avoid becoming a victim of income tax identity theft is to protect the privacy of our Social Security numbers and file our legitimate income tax returns as early as possible.  Income tax identity theft can only be accomplished if the identity thief has your Social Security number and files an income tax return before you file your legitimate return.

As for Congress, how many more billions of taxpayers dollars needs to be lost to income tax identity theft before they take the simple step of reforming the laws regarding the filing of W-2s?

Scam of the day – June 4, 2015 – IRS changes identity theft policy

June 4, 2015 Posted by Steven Weisman, Esq.

The IRS, which has not been covering itself in glory, as it tries to respond to the multi-billion dollar problem of income tax identity theft recently got something right.  In response to a request from New Hampshire Senator Kelly Ayotte, the IRS is changing its policy regarding providing copies of fraudulent income tax returns to victims of income tax identity theft where their names and Social Security numbers were used to file fraudulent income tax returns seeking phony refunds.  Believe it or not, until now the victims of income tax identity theft were prevented from seeing the income tax returns filed using their names and Social Security numbers because it violated the privacy rights of the criminals who filed those returns.  Pursuant to the IRS’ new policy, the victims of income tax identity theft will now be able to see those returns, which can provide a window through which the victims can see the extent of the theft of their personal information and put the victims in a better position to understand the extent of the harm, which is the first step in remedying the problem.

TIPS

The two best things you can do to protect yourself from becoming a victim of income tax identity theft are to file your income tax return as early as possible to beat the identity thief to the punch.  If you file before the identity thief does, the identity thief’s return will not be accepted by the IRS.  The second thing everyone should do is to protect the privacy of your Social Security number as much as possible.  The more places that have your Social Security number, the more you are in jeopardy of identity theft.  Also, never carry your Social Security card with you in your wallet or your purse.  Having your cash stolen is much less of a problem than having your identity stolen and if your Social Security number falls into the hands of an identity thief, the crime is all but done.