The filing season is the most active time of the year for tax scams. These scams take every shape and form, ranging from telephone calls to individuals to sophisticated schemes targeting employers and businesses. The goal of all these scams is identity theft. Using legitimate identities of unsuspecting individuals allows criminals to file fraudulent returns and claim bogus refunds.
Phone and email scams are among the most common scams. Every day, individuals receive calls and emails from criminals pretending to be IRS employees. Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. Criminals use IRS employee titles and fake badge numbers to appear legitimate. They may also use the victim’s name, address and other personal information to make the call sound official. The phone calls often threaten legal action or arrest if the taxpayers do not immediately make a payment, usually with a debit or gift card. Taxpayers receiving threatening telephone calls should hang up immediately. The IRS will never demand immediate payment using a specific payment method, such as a prepaid debit card, gift card or wire transfer. The IRS also will never threaten arrest.
Email scams often ask recipients to provide personal and financial information in order to to “verify” a tax obligation or claim a refund. The emails appear to be genuine communications from the IRS. Criminals create websites that appear legitimate in the hope that individuals will take the bait and provide money, passwords, Social Security numbers and other personal information. Scam emails also can infect a taxpayer’s computer with malware. The malware can give criminals access to the computer, laptop tablet, or other device, enabling them to access all sensitive files or track keyboard strokes, exposing login information. The IRS has repeatedly emphasized that it never initiates contact with taxpayers via email about a bill or refund. Taxpayers should delete these emails immediately.
Criminals are increasingly disguising emails to make it appear as if the email is from a company or organization executive. Typically, this email is sent to an employee in the payroll or HR department, requesting a list of all employees and their W-2 statements. This scam is sometimes referred to as business email compromise (BEC) or business email spoofing (BES). This scam targets all types of businesses: school districts, tribal casinos, chain restaurants, temporary staffing agencies, healthcare, and shipping and freight. Businesses that received the scam email last year also are reportedly receiving it again this year. The IRS has asked employers and businesses to forward these bogus emails to the agency at firstname.lastname@example.org.
The IRS is making progress in identifying and curbing tax-related identity theft, according to the Treasury Inspector General for Tax Administration (TIGTA). The IRS, tax professionals and the tax software community have joined together to better protect taxpayer information. The agency has upgraded its return processing identity theft filters and taken other behind the scenes measures to uncover fraudulent returns. All of these measures, TIGTA reported in February, have helped to deter tax-related identity theft, but criminals continue to look for ways to trick taxpayers and the IRS.
Q: I received a letter from the IRS about a suspicious return. What should I do?
Many taxpayers discover that they have become a victim of identity theft when they receive a letter from the IRS. This may occur when the IRS stops a suspicious tax return that has indications of being identity theft, but contains a real taxpayer’s name and/or Social Security number. The taxpayer can confirm whether or not they did in fact file the return in question. If they did not file the return, the IRS will take steps at that time to assist them.
One communication that the IRS uses is Letter 5071C. This letter is mailed through the U.S. Postal Service to the address on the return. It requests the taxpayer to verify his or her identity through this secure website, or call the toll-free number in the letter, at which point the IRS will either continue processing the return if the taxpayer did file it, or reject the return if not. The IRS has recommended that taxpayers should have available a copy of the letter, their prior year return (if one was filed) and the current year return (if one was filed), including supporting documents for each return. This would include W-2’s, 1099’s, Schedule C, Schedule F, and other supporting documents.
A similar communication that the IRS uses is Letter 4883C. This letter also is mailed through the U.S. Postal Service and asks taxpayers to verify their identities. The letter may provide other instructions as well.
It’s worth repeating: The IRS never asks a taxpayer to verify his or identity by email.
If you have received a letter from the IRS related to possible identity theft, please contact our office. We can help you navigate the IRS and respond to the agency’s questions.