CEO at BBB in Michigan discusses her experience with ID theft. Videolicious
A coordinated crackdown on tax-related, ID theft has drastically reduced the numbers of new refund fraud victims. But new schemes keep popping up all across the country.
“ID thieves are growing in sophistication,” warned IRS Commissioner Charles Rettig on call with the news media on Wednesday.
The IRS touted a 19-percent decline in the number of reported identity theft victims for this year through October, compared with the same period in 2017. The decline is even more dramatic — down more than 70 percent — compared with 2015.
The IRS reported that about 177,000 taxpayers were victims of tax-related ID theft so far this year through October 2018. That compares with about 242,000 victims in 2017 and about 699,000 victims in 2015.
Many times, people discover they’re a victim when they have trouble with e-filing their own tax returns. Headaches only build, as you try to unravel the mess and claim your legitimate tax refund.
The IRS has been working with state tax agencies and tax professionals, including tax powerhouses H&R Block and Intuit, to safeguard taxpayer data since 2015 through a partnership called a “Security Summit.”
ID thieves aren’t giving up, though, so the IRS and others are warning about some aggressive scams.
The secret sauce of the Security Summit has included getting the word out in real time to notify key players in the tax ecosystem about new scam twists.
Lynne Riley, state revenue commissioner for Georgia, said her state ran up against a scam where a business account was created with the state department of revenue.
The crook manipulated the numbers to make it appear as if the business had somehow been overpaying or over-withholding required taxes with the state and then the con artist requested fraudulent refunds.
By sharing that information in real time, she said, others could crack down on any similar types of schemes.
The Atlanta TV stations reported more details on the elaborate scheme, which involved an 18-year-old who allegedly set up an online business out of his parents’ home. The teen was arrested last week and accused of attempting to scam the state out of more than $20 million. The state’s system spotted the fraud and the state did not pay any money.
Allegedly, the teen amassed billing and banking information by selling goods on Amazon. It is alleged that he set up withholding accounts and sales tax accounts, overpaid those accounts by more than $25 million and then requested refunds.
During the holiday season, consumers are once again reminded of how important it is to watch out for fake websites, phishing emails and other schemes.
Employers are reminded that they can be targets of ID thieves, too, because companies hold sensitive tax data on employees, such as Form W-2 data, which is highly valued by crooks.
“The threats are constantly evolving,” said John Ams, executive vice president for the National Society of Accountants.
Bogus email schemes try to steal money or key information that can be used to file fraudulent tax returns. In 2018, for example, the IRS recorded a 60-percent surge in phishing scams.
Beware of subject lines in emails that say things like: “IRS Important Notice” or appear to be from a government agency that is threatening to seize your tax refund.
Another big trend for scammers in 2018 focused on targeting tax professionals in order to steal the data of tens of thousands of tax filers.
During the 2018 tax filing season, the IRS received five to seven reports a week from tax firms that had experienced some level of data theft. So far for the year, the IRS received 234 such reports through Nov. 5. That’s up 29 percent from last year.
The crooks want good, reliable information in order to create a fraudulent tax return that looks good enough to bypass IRS filters.
Ams, of the National Society of Accountants, said the IRS is hindered because it has no authority to require tax professionals to report breaches. By reporting breaches quickly, though, more ID theft could be stopped, Ams said.
Tax professionals are warned to look out for signs of fraud that include: Hearing from clients who haven’t yet filed tax returns but receive refunds or letters from the IRS; filing an electronic return but then getting rejected by the system because a return with the same Social Security number was already filed; and suddenly seeing that the number of returns filed using the tax practitioner’s electronic filing identification number far exceeding the tax professional’s actual number of clients.
Contact Susan Tompor: [email protected] or 313-222-8876. Follow Susan on Twitter @Tompor.
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