Scam of the day – July 5, 2017 – IRS private collection scams

Many people have been scammed by criminals calling them on the phone purporting to be from the IRS making various threats unless the targeted victim immediately pays alleged overdue taxes.  For years, I have been telling people that the simplest way to know that the person calling you is not from the IRS is to remember that the IRS will never initiate contact with a taxpayer about overdue taxes through a phone call.  But that has changed.  In 2016 I told you about a new law Congress passed requiring the IRS to use the services of private collection agencies to collect some 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 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.

The law has now gone into effect and the IRS is sending letters by regular mail to people whose overdue tax accounts have been turned over to one of the four private collection agencies authorized by Congress to collect overdue taxes for the IRS.  The IRS is also at this time warning people to be wary of people claiming to be working for one of these companies who are, in truth, just scammers.  Of course, the IRS did not give any concrete advice as to how to know if the caller 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.

In addition, the debts assigned to the private collection agencies are tax debts that are many years old and about which the taxpayer would have been contacted by mail previously by the IRS.  Also, be aware that none of the Congress authorized collectors will ask you to make a payment by credit card over the phone and certainly not ask you to wire money or pay by an iTunes card or gift card as some tax scammers have done.

March 28, 2017 – Steve Weisman’s latest column for USA Today

Here is a link to my latest column for USA Today in which I discuss the latest income tax scams.  Income tax scams are always evolving and you need to know how to recognize and avoid these scams.

http://www.usatoday.com/story/money/columnist/2017/03/28/beware-evolving-income-tax-scams/99408936/

Scam of the day – April 15, 2016 – Tax scams multiply as filing deadline approaches

Today, April 15th is the usual deadline for filing your federal income tax return, however, as many people know, if the 15th falls on a weekend, the filing deadline is pushed back to the next Monday.  If April 15th is a holiday, the filing date is also pushed back.  This year, April 16th is Emancipation Day, which is a legal holiday in Washington D.C. and because it falls on a Saturday, federal employees have the preceding Friday, April 15th, off from work which pushes the filing deadline to the next business day, which is Monday, April 18th.  If that isn’t complicated enough, if you live in Massachusetts or Maine, you have until April 19th to file your tax returns because April 18th is Patriot’s Day, a state holiday in those two states.

In any event, scammers and identity thieves don’t take off holidays and the IRS is warning people again about an increase in income tax scams that are occurring in the final days before the income tax filing deadline.  There are a number of various scams tied to income tax filings, but they generally fall into four categories.  The first is when you get a telephone call purporting to be from the IRS informing you that if you don’t send them money right away, you will be arrested or suffer some other serious penalty.  The second is when you receive an email or text message apparently from the IRS requiring you to verify information in order to receive your refund.  You supply this information by clicking on a link.  The third is when you receive a telephone call apparently from the IRS asking you to confirm personal information over the phone in order to receive your refund.  The fourth is when you receive a call, text message or email from your online tax preparation company requiring you to confirm personal information.

All of these are scams that will either directly steal your money or provide the identity thieves with personal information they can use to make you a victim of identity theft.

TIPS

The IRS will not call you and threaten you in order to collect outstanding taxes and they will not require you to wire money to them.  Even if your Caller ID indicates it is the IRS calling, scammers using a technique called “spoofing” can make it appear on your Caller ID that it is the IRS calling when it is not.  If you get a call from someone purporting to be from the IRS initiating contact about collecting overdue taxes, it is a scam.  It is that simple.  Just hang up.

The IRS will not be contacting you by phone, email or text messages to confirm information regarding your tax return, so never provide personal information in response to being contacted in these ways by someone pretending to be with the IRS.  In addition, merely by clicking on a link contained in such electronic messages could download malware that could steal your personal information from your computer and use it to make you a victim of identity theft.

Phony emails or text messages from your online tax preparation company requesting personal information is a very prevalent scam this year.  Whenever you get an email or text message from anyone asking for personal information, do not provide it unless you have independently confirmed that it was legitimate.  Trust me, you can’t trust anyone.

Here is a link to the IRS’ recent warning.  https://www.irs.gov/uac/Newsroom/IRS-Warns-of-Continued-Scams-and-Varied-Tactics-as-the-Tax-Deadline-Nears

Scam of the day – February 22, 2016 – IRS issues new warning about email tax scams

For the last six months in particular the IRS and the Treasury Inspector General for Tax Administration have been warning the public about scams in which scammers pose as IRS agents calling unsuspecting taxpayers and threatening them with fines, penalties and even jail time if they do not immediately pay the scammers for claimed overdue taxes.  According to the IRS, for the last two years there have been reports of approximately 736,000 people being called by scammers posing as IRS agents demanding immediate payment of overdue taxes by credit card,  prepaid debit cards or wired funds.    Often the scammers threaten their victims with criminal charges, deportation or loss of a driver’s license.  According to J. Russell George, the Treasury Inspector General for Tax Administration, the IRS is aware of about 4,550 victims who have paid more than 23 million dollars to these scammers over the last two years.  Unfortunately, the real figure of victims and money lost is most likely far in excess of these figure.  These scams continue to plague taxpayers and will probably only get worse when the IRS actually starts using paid collectors who will be contacting taxpayers by phone later this Spring thereby making the scam callers look more legitimate.

Now, however, the IRS has issued a new warning about email tax scams which have increased 400% since last year.  In these scams, people are targeted with phishing emails that appear to come from the IRS asking for personal information and providing links for people to click on which either take them to a legitimate looking webpage that asks for information that is used to make the person a victim of identity theft or, in other instances, merely by clicking on the link, keystroke logging malware is downloaded on the victim’s computer which steals information and uses it to make the person a victim of identity theft.  Often the guise under which the emails are sent is asking the taxpayer to update filing information including information about W-2s.

TIPS

Both the phone and email IRS scams are easy to spot.  The IRS will never initiate communications with a taxpayer by phone or email so if someone calls you  or emails you purporting to be from the IRS in an initial effort to collect overdue taxes or to confirm information, you should hang up the phone or delete the email.   Even if your Caller ID appears to show that the call is from the IRS, this does not mean that the call actually is from the IRS.  Through a technique called “spoofing” a scammer can make the call appear to be legitimate, but it is not.  The IRS will never demand payment by credit card, debit card, cash card or wired funds through an initial telephone call or email.  If you think that you really may owe taxes, call the IRS at 800-829-1040 to speak to a real IRS employee.  If you receive a scam call or email, you may wish to report the call to the Treasury Inspector General for Tax Administration at 800-366-4484.

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

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.

Scam of the day – April 13, 2015 – FTC refunding money to victims of tax relief scam

As we approach the April 15th deadline for filing income taxes, it is a good time to look at a scam involving a company that fraudulently promised to reduce the tax debts of many Americans.  In my February 11, 2013 Scam of the day, I told you about American Tax Relief LLC.   In 2013 the FTC announced that it had come to a settlement with the  American Tax Relief company in regard to charges that the company had stolen more than a hundred million dollars from frightened taxpayers who had turned to them to help them reduce or eliminate their income tax debts.  You may have heard or seen American Tax Relief’s advertisements in which they promised to be able to settle tax debts for pennies on the dollar, stop wage garnishments and stop property seizures.  American Tax Relief misled consumers into believing that the IRS’ Offer in Compromise program by which taxpayers are permitted to settle their tax debts for less than what they owe is easy to achieve when, according to IRS figures, only about 30% of people applying for this program achieve any level of reduction of tax debt.  If you haven’t heard or seen these advertisements of American Tax Relief, you certainly have seen or heard them from other companies.  Unfortunately, many, if not most of these companies are phony.  You end up paying large up front costs and get little relief.   Now the FTC is sending refund checks to 18,571 of the victims of American Tax Relief totaling more than 16 million dollars.  If you were a victim of American Tax Relief and have not received a check,  you can use this link for more information about the refund program of the FTC.  https://www.ftc.gov/enforcement/cases-proceedings/refunds?utm_source=govdelivery  This link also provides information about the FTC’s refund programs involved with other FTC cases against such companies as L’Occitane, AdvaCal, and Lean Spa.

TIPS

Just because you have seen advertising in legitimate media does not mean that the companies advertising are legitimate.    If you owe income taxes, the IRS has programs to assist you including the Installment Agreement Program by which you may be able to make payments on your tax debt over time.  In some limited circumstances the Offer in Compromise Program may be available to you, but you are best off utilizing a CPA or a lawyer in negotiating with the IRS over any offer in compromise.   The IRS also has a Taxpayer Advocate Service which you can reach at irs.gov/advocate or by phone at 1-877-777-4778.  I urge you to be particularly wary of companies that claim that they can reduce or eliminate your tax debts.  Check them out with the IRS and the FTC before considering using their services.  Frankly, you would be much better off with the assistance of a knowledgeable tax lawyer or CPA.

Scam of the day – July 27, 2014 – Senate holds hearings on the Grandparent scam

Recently the Senate Special Committee on Aging held a hearing on the infamous Grandparent scam, which occurs when a scammer calls an elderly person posing as their grandchild who has been involved in some sort of emergency and needs the grandparent to wire money to them right away.  One 81 year old witness at the hearing spoke about receiving a call late at night from someone purporting to be his grandson who needed bail money after being arrested on a drug charge.  In response to the call, the witness testified how he purchased a  $7,000 prepaid money card and then provided the money card information to the scammer who has never been heard from again.  It was only afterwards that the witness was able to reach his grandson on his cell phone to learn that the entire matter had been a scam.

The Senate Special Committee on Aging has in recent years focused much attention on scams preying upon older Americans, such as the Jamaican lottery scam, income tax scams, Social Security scams and Medicare fraud.

TIPS

Never wire money unless you are absolutely sure about to whom you are wiring the money and it is not a scam.  If a claim about a medical or legal emergency is made, contact the hospital or legal authorities in the area to confirm that the information is accurate.  Make sure that you have the cell phone numbers of your grandchild as well as  anyone with whom your child or grandchild is traveling so you can confirm any calls claiming that an emergency has arisen.  Call the child directly on his or her cell phone to confirm the story.  Students traveling abroad should register with the State Department’s Smart Traveler Enrollment Program at https://travelregistration.state.gov/ibrs/ui/.  This program can help with communications in an emergency situation.

Scam of the day – January 21, 2013 – Income tax scam season has begun

The good news according to the IRS is that their crack teams of forensic accountants prevented the payments of 1.5 billion dollars in fraudulent tax refund checks last year.  The bad news, however is that a report done for the Treasury Department predicts that the IRS will pay more than 21 billion dollars in fraudulent tax refund checks over the next five years.  Even worse news is that if an identity thief manages to file a tax return using your name and Social Security number before you do, it could be well over a year before you get your legitimate tax refund.  Tax identity theft is getting worse, not better and you can’t depend on the IRS to protect you.  Identity thieves who manage to steal your name and Social Security number are filing early returns with phony W-2s and getting huge refunds while your refund gets stuck in bureaucratic hell when you file your legitimate tax return.

TIPS

Their are several keys to protecting yourself from tax identity theft.  First, file early and beat the identity thieves to the punch.  Second, keep your personal information, particularly your Social Security number as protected as possible.  Identity thieves will often try to trick you into providing your Social Security number as when they tell you that you have won a contest that you have never entered  and need your Social Security number for reporting purposes.  Protect your computer’s security with a strong firewall and security software that is constantly updated.  Don’t click on links or attachments unless you are sure they are legitimate.  This is a primary way that identity thieves install keystroke logging malware on your computer through which they can steal all of the information from your computer.