Yes you read that right. The IRS plans to go forward with hiring Equifax to verify and validate taxpayer identities in the wake of their massive systems breach. If you missed the news (because apparently the IRS did), hackers were able to obtain confidential financial information—including social security numbers—of 145 million users; which now equates to the largest US data breach in history.
Outraged by the IRS’s decision to hire Equifax, some members of Congress spoke out including Senate Finance Chairman Orrin Hatch (R-Utah). He recently told Politico:
“In the wake of one of the most massive data breaches in a decade, it’s irresponsible for the IRS to turn over millions in taxpayer dollars to a company that has yet to offer a succinct answer on how at least 145 million Americans had personally identifiable information exposed.”
The IRS continues to defends it’s choice, stating that the service Equifax was hired for will not put U.S. taxpayers personal information at risk. They will, however, keep a watchful eye on their new hire.
If you have been affect and/or would like to find out if your were affected by Equifax’s breach you can do so by clicking here. However, we advise caution before using services to ascertain Equifax exposure. According to the terms and conditions, users that access Equifax’s systems to determine if their information was compromised are voluntarily giving up their rights to sue and/or join class action lawsuits against Equifax.
If you would like more information about this breach or would like to to speak to an R&G Brenner professional, contact us toll free at (888) APRIL-15 or via web by clicking here.
Police in India have arrested at least 70 people involved with impersonating IRS agents at a fake call center in an attempt to defraud U.S. Taxpayers. Hundreds more are being held for questioning.
The popularity of this scam has grown exponentially as nearly every taxpayer has experienced a call like this first hand, or know a friend or acquaintance that has received calls like this. Over the last 3 years alone, the IRS has received nearly 1 Million complaints of similar low-tech scams which cost taxpayers over $26 Million. It has been previously reported that these calls have originating from countries like India, Pakistan & Russia:
According to police in Mumbai, the yearlong scam involved running fake call centers which sent voice mail messages telling U.S. nationals to call back because they owed back taxes.
Those who called back and believed the threats would fork out thousands of dollars to “settle” their case, Mumbai police officer Parag Marere said Thursday.
The scam brought in more than $150,000 a day, Marere said without giving a total sum. If the scam netted that amount daily, it would have made almost $55 million in one year.
Some victims were also told to buy gift vouchers from various companies, and hand over the voucher ID numbers which the impostors then used to make purchases, Marere said.
Police said they are likely to file charges against many of the 600 or more people still being questioned on suspicion of running the fake call centers, housed on several stories of a Mumbai office building…
Indian media reports said 70 percent of the scam’s proceeds were retained by the suspects in India, while the rest was paid to collaborators in the U.S.
Indian news broadcaster NDTV reported that one U.S.-based company allegedly collected the victims’ personal information and passed it to the fake call centers.
Here are some tips to avoid being the victim of a phone scam:
The IRS rarely if ever initiates calls to taxpayers. If you owe tax money they will formally notify taxpayers with a mailed letter to the address listed on the tax return
The IRS cannot demand payment on the spot; the IRS also offers payment plans
The IRS does not request a specific type of payments like gift cards or prepaid debit cards
The IRS will never ask for credit card information over the phone
This particular call center was working with U.S. based criminals who provided the taxpayer contact information to this call center. Protecting your private personal information is the first step in avoiding these types of scams. NEVER provide personal information over the phone. NEVER e-mail information that contains social security numbers, bank account number, credit card numbers, user names or passwords. R&G Brenner offers secure file transfer services free-of-charge to all of it’s clients who want a digital solution for sending tax related documents. All tax professionals who are serious about protecting their clients private tax information—whether independent, franchise or CPA— should offer a similar service. If you’d like more information about how R&G Brenner protects client data, feel free to contact us at (888) APRIL-15 or by clicking here.
Lastly, if you feel that you are becoming a target for a scam like this, you can report it to the IRS by calling: (800) 366-4484.
Acting IRS commissioner Steven Miller recently sat before a congressional panel and hinted that the best way to combat the explosion of tax fraud may be to either delay the tax filing season, or wait to release all refunds until after the filing season concludes on April 15th.
The reasoning goes something like this: The vast majority of fraud involving income taxes occurs early in the filing season (January & February). Delaying the filing season will reduce fraud because a) It gives the IRS a chance to cross reference filed tax data with what employers are required to send to the IRS and b) There will simply be less time to perpetrate fraud and thus less cases. Looking simply at the black & white numbers, yes this would seem like a good idea. However, like the tax code, this is not a black & white issue. Millions of honest taxpayers file their returns as early as possible because they really need the money. These are usually lower-income taxpayers who depend on their refunds to pay bills, rent, and put food on the table. When you consider the money spent for the holiday season, the urgency for these refunds is magnified. Delaying the start of the filing season could seriously put these taxpayers at risk.
Another proposal involves waiting until after April 15th to issue all refunds. That way every tax return can be reviewed and verified before refunds are released, and would virtually eliminate the majority of fraud cases. However, under current IRS regulations, the government would be required to pay taxpayers interest on their delayed refunds. This cost of combating fraud could outweigh the cost of the fraud itself.
Either way, it is very early to speculate proposed changes and whether or not they will be implemented. Nevertheless, if either of these proposals are ultimately implemented in full or in part, it appears the group that will be affected the most will be the lower income taxpayer.
Identity theft has become a huge problem for the IRS. Last year alone, there were nearly 650,000 cases of Identity Theft reported to the IRS. Some believe the skyrocketing amount of cases are a direct result that the IRS now requires all tax returns to be filed electronically. The IRS has implemented “digital safeguards” this year to intercept returns which they deem have a high probability of identity theft, and have deployed a task force of 3,000 agents who’s job it is to investigate Identity Theft. Unfortunately, many taxpayers who are legitimate “early filers” are bound to get caught up in the web of “digital safeguards” and have their much-needed refunds delayed. And while the Task Force the IRS has deployed to investigate cases is good, it’s effectiveness is limited to after identities are already stolen are returns are filed fraudulently; no real relief to the victims. While this influx of electronic data has clearly exposed the IRS safeguards of personal & private electronic data to be lacking, the are certain steps that the taxpayer can take to help secure their sensitive information:
Avoid sending or receiving W2’s, 1099’s or any other personal tax documentation to or from anyone by e-mail. Encryption offers some defense, but there are still safer ways to communicate your tax data. REMEMBER: A single W2 or 1099 contains your name, address, social security number/EIN; all the info that any would be thief needs to file a fraudulent return. An email server can be anywhere in the world and could be susceptible to attack. Furthermore, the email accounts of the sender and receiver are susceptible to hackers as well especially since it has been shown that password security for the average user is sorely lacking. The best alternatives are to a) send everything by mail or b) fax your documentation (however many fax services are increasingly turning to “E-Fax” technology whereby faxes are converted to emails…thats why option a) is still the most secure.)
Do not carry your social security card with you, or supply your SS# to anyone over the phone/internet without confirming who they are and why they need it. This appears to be a “no brainer”, but many taxpayers carry their Social Security numbers in their wallets/bags along with their driver’s licenses and IDs. Again, a lost wallet gives everything a thief needs to steal identities. Beware of online & phone scams as well asking for your SS#’s. The IRS will NEVER request sensitive private information over the web/phone unsolicited.
Maintain physical safe-guards to protect your private data. This is as simple as a locking file drawer or cabinet.
Maintain digital safe-guards. Sometimes it is impossible to keep all your private information only in paper format. If you keep data on your computer it is important to have in place: a) strong passwords which are changed frequently b) a firewall; never plug a wire directly into your computer from a your broadband modem c) anti-virus software.
Verify your credit report. This should be done once every 12-18 months. Anything out of the ordinary like a steep drop in your rating is a good indicator that your identity may have been compromised.
Optional: Obtain Identity Theft Protection. If you have ever been a victim of identity theft, buying protection is recommended; who knows who still has your information out there? If you relay or store a lot of personal data via the web, protection may be a good idea as well. There are many affordable services that would be well worth the cost if you become a victim of Identity Theft just once.
While there is no “magic bullet” to prevent Identity Theft entirely, following the general rules above will limit your exposure. If you’d like more information on how to safeguard yourself and your family from Identity Theft–or have any tax related inquiries–feel free to contact and R&G Brenner professional here, or call us toll free (888) APRIL-15.
NEW YORK, July 19 – Call it one more unintended consequence of our complicated income tax system: U.S. taxpayer identity theft is rising, and if your identity is snatched, you can expect a long and tortuous process before you are made whole.
In 2011, some 641,052 taxpayers were affected by identity theft, more than double the 270,518 the previous year, according to Internal Revenue Service statistics cited in a recent report by the Treasury Inspector General for Tax Administration (TIGTA). Nearly 16,000 taxpayers complained of problems related to identity theft to the Taxpayer Advocate in the first half of fiscal 2012, a 57 percent increase over the previous year.
The problem — which can make taxpayers’ lives miserable and costs the U.S. Treasury significantly — has become so big that Taxpayer Advocate Nina Olson has identified it as one of the biggest problems, while the House Judiciary Committee held a hearing on the topic on July 10.
“Identity theft wreaks havoc on our tax system in many ways,” Olson testified. “Victims not only must deal with the aftermath of an emotionally draining crime, but may also have to deal with the IRS for years to untangle the resulting tax account problems. Identity theft also impacts the public …(Treasury)… as Treasury funds are diverted to pay out improper refunds claimed by opportunistic perpetrators.”
What exactly does identity theft mean when it comes to taxes? Well, in one of the more extreme examples, in early July, a former IRS employee was indicted for allegedly using her position to steal taxpayer identities to apply for credit cards. More commonly, thieves steal Social Security numbers and use them to file fraudulent tax returns and snag illegitimate refunds.
Taxpayers sometimes discover that their identities were stolen when they file a tax return and are notified that they already had filed and a refund had been dispersed. Sometimes, the identities come from dead taxpayers, or from senior citizens or others who weren’t required to file tax returns.
In one of the more disturbing twists, sometimes the thief turns out to be none other than your own tax preparer, to whom you willingly turned over your financial information.
Return preparers may get people to sign their returns and then alter them, inflating income or deductions without their clients’ knowledge and consent and then pocketing the difference between the revised refund amount and what the taxpayer expected to get. This type of fraud is particularly problematic, because the IRS doesn’t have a clear procedure for going after preparers — and going after the taxpayer, who is the victim of the fraud, isn’t fair.
Fighting taxpayer identity theft is a bit like going after Nigerian email scammers, a constant battle that seems unlikely to be won anytime soon. But the IRS is trying. In fiscal 2011, the IRS opened 276 criminal investigations for identity theft, and sent 80 swindlers to prison for their frauds.
And a big enforcement sweep in January by the IRS and Justice Department — which IRS Commissioner Doug Shulman called an “unprecedented effort against identity theft” — targeted 105 people in 23 states. Meanwhile, in an effort at prevention, the IRS has also set up a program to give taxpayer who have been victims of identity theft special taxpayer-identity protection numbers so they can file future returns without complications.
“Certainly, refund-driven tax fraud is not a problem the IRS can fully solve, but I believe that the IRS can do much more to detect questionable returns and assist victims of identity theft or return preparer fraud,” Olson testified at the July 10 hearing.
What can you do to avoid becoming a target? First, beware of “phishing” emails that appear to be from the IRS. The IRS does not contact taxpayers by email asking for personal information, so if you get this kind of email you can assume it is fake. If you do receive one (I often have), ignore it -— or better yet, forward it to the IRS, at firstname.lastname@example.org.
Second, be careful about giving out your Social Security number. Don’t send it over an unsecured site, even for legitimate purposes. And don’t carry your Social Security card with you. That way even if your wallet is stolen, your identity is less likely to be.
Third, shred documents containing personal and financial information once you no longer need them. Don’t ever simply dump old tax returns in the trash.
Fourth, make sure you trust your tax preparer. In one recent high-profile case, in March, the Illinois Attorney General’s office sued Mo’ Money Taxes, a tax-prep service and lender based in Memphis, and accused it of filing unauthorized federal income tax returns and charging undisclosed and exorbitant fees. The company did not respond to a request for comment.
If you are the victim of identity theft be prepared for a long slog, as it can take more than a year to resolve an identity theft case. The IRS’s guidelines for identity theft are “inconsistent and confusing,” according to the TIGTA report, and procedures are dispersed among 38 different Internal Revenue Manual sections.
“The IRS uses little of the data from the identity theft cases to identify any trends, etc., that could be used to detect or prevent future refund fraud,” TIGTA reported.
If you suspect that you’ve been a target, file an identity theft affidavit, Form 14039, available online here . You can also call the IRS’s Identity Protection Specialized Unit at (800)908-4490.