IRS Scams and why your refund could take longer this year!

Vasbinder.Leonard.Lenny.2014-02-14 12.22.28

By: Leonard “Lenny” Vasbinder

Published March 8 2017

If you have your hopes up for a quick income tax refund this year, don’t hold your breath!  Because of the millions of fraudulent and erroneous tax returns filed last year, with the IRS handing out at least $2.2 billion in fraudulent refunds and another $20 billion in overpayments, the agency has been under Congressional and administrative scrutiny to crack down on fraud and errors.

According to an Associated Press story, the IRS paid out fraudulent claims of $3.1 billion in 2014 and $5.8 billion in 2013.

The Government Accountability Office (GAO) report said the IRS is also falling short of protecting taxpayers identification information, allowing identity thieves to file hundreds of thousands of tax returns using stolen identities.  The IRS reports that because of the recent tougher screening measures, the latest numbers dropped by 50 percent, but still amounted to 275,000 taxpayers being scammed by identity theft.

Besides outright fraud causing problems that are delaying the processing of tax returns, there is also the problem with higher refunds being paid due to errors in computing the amount of the refund.  It is taking at least a month longer to process and issue refunds, especially to the early filers who were expecting and anticipating refunds including the Earned Income Tax Credit (EITC), or additional child credit, which have been a major segment of the fraudulent tax returns targeted by scammers.

According to a Forbes.com article by Robert W. Wood, “IRS Admits It Encourages Illegals To Steal Social Security Numbers For Taxes,” (April 2016)  http://www.forbes.com/sites/robertwood/2016/04/13/irs-admits-it-encourages-illegals-to-steal-social-security-numbers-for-taxes/ “A 2011 audit by the Treasury Inspector General for Tax Administration (TIGTA) confirmed that individuals who are not authorized to work in the United States were paid $4.2 billion in refundable credits.  Of course, undocumented immigrants cannot legitimately get Social Security numbers, but it seems the IRS doesn’t care. Besides, they can file taxes with an Individual Taxpayer Identification Number (ITIN). They are not supposed to get the Earned Income Tax Credit, but they can receive the additional child tax credit.”

The change that is allowing the IRS to take longer to process tax returns is a recent law known as PATH, or Protection Against Tax Hikes.  Congress passed the law in 2015 and President Obama signed it into law.  It created larger tax credits for earned income and for children.  The law also gave low and moderate income families the ability to file their tax returns without waiting for their W-2 forms.  This part of the law is what led to so much fraud and identity theft.  The IRS reported that over 25 percent of all tax credits paid under PATH were paid “in error” and amounted to over $20 billion in 2016.  Congress has changed the law so that the IRS will have to do a more thorough screening of tax returns and will require W-2 forms now.

According to the IRS web page, “Tax Scams / Consumer Alerts,” https://www.irs.gov/uac/tax-scams-consumer-alerts some of the most common scams are online scams, email phishing scams, and telephone scams.  The IRS says that they never initiate a phone call, email, text, or social media contact with a taxpayer.  The IRS reports a 400 percent increase in phishing and malware (malicious software) in the 2016 tax period.

Scammers use the IRS logo and spoofed email addresses and send these emails to millions of people.  The emails are designed to trick people into thinking they are official emails from the IRS.  The emails ask taxpayers a variety of questions, ultimately seeking personal information, the status of refunds, transcripts and verifying the taxpayer’s PIN information.  Variations of these scams also come through as text messages and private messages on social media.

Oftentimes, these attempts will have language like “you are to update your IRS e-file immediately,” and the emails will contain links to USAgov and IRSgov without the dot, and the links send you to a phishing website that looks exactly like the official IRS website.  Once you go there and enter your information, the scammers have it and then use it at the official IRS website to file a fraudulent tax return with your refund going to them, not you!

These fake websites will often install malware on your computer which tracks your keystrokes and reports your keystrokes to the scammers.  Even if you don’t type the information into the fake website, as soon as you go to the official IRS website and enter your information, the scammers will have it then.

According to the IRS website, “Phone Scams Continue to be a Serious Threat, Remain on IRS “Dirty Dozen” List of Tax Scams for the 2016 Filing Season,” criminals, impersonating IRS agents, will aggressively call and threaten taxpayers.  They threaten police arrest, license revocation, deportation, and many other threats.

The scammers make unsolicited calls and try to force taxpayers to pay a bogus IRS tax bill.  They con the taxpayer into sending them a cash payment via a debit card payment or wire transfer, or to give them social security numbers and other identification information.  They also leave “urgent” call-back requests using phone Robo calls and phishing emails.

According to the website, there are five things scammers will often do but the IRS will never do:

  • Call to demand immediate payment for taxes owed without first having mailed you a bill.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:

  • Do not give out any information. Hang up immediately.
  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” webpage. You can also call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you think you may owe back taxes, go to the source and call the IRS at 800-829-1040. IRS workers can help you.


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