IDENTITY THIEVES TARGET TAX REFUNDS

Doing your taxes is painful enough. It can be especially so when a scam artist files a phony tax return with your name, Social Security number and other personal information in an attempt to collect a refund. Growing numbers of victims are complaining to the IRS and the Federal Trade Commission about this and similar scams. In one recent case in Pensacola, Florida, Holly M. Barnes, a former Girl Scout troop leader, was sentenced to 10 years in federal prison aft er pleading guilty to multiple counts of identity theft and filing “false and fictitious” claims for tax refunds. Ms. Barnes created a bogus Girl Scout medical-release
form to get sensitive information including children’s Social Security numbers. She then used the information to prepare andfile electronic federal income tax returns. The phony refunds were transferred into five diff erent bank accounts she controlled. She fi led false claims totaling more than $187,000, from which she obtained more than $87,000 from the government as a result of fraudulently using the identity of these children, including her own children. Separately, a Connecticut woman was recently notifi ed by a New York bank
that her application for a refund anticipation loan had been rejected. She had not applied for such a loan and had not even prepared her tax return for 2007. She also recently received a letter from the New York state tax department questioning her 2007 return which she had not fi led. Refund fraud is not the only type of axrelated
identity theft . In other cases, the thief uses a stolen Social Security number to get a job in the U.S. In a typical case, that person’s employer later fi les a Form W-2 refl ecting the wages, and IRS data systems
attribute those wages to the rightful owner of that Social Security number. Victims discover the problem aft er getting a startling notice from the IRS asking about unreported income. Th e Internal Revenue Services cautions taxpayers to make every eff ort to protect the confi dentiality of their key personal information, especially their Social Security numbers. Be careful to safeguard the privacy of sensitive personal data you store on your computer or your PDA. When choosing your password, do not use the word “password” or your birthday. Check your credit reports regularly to see if anything looks odd or suspicious. If you do encounter tax-related identity theft problems, report them not only to the IRS but also to the Federal Trade Commission
at www.ft c.gov.

IRS WARNS OF NEW E-MAIL ANDTELEPHONE SCAMS

The Internal Revenue Service is warning taxpayers to beware of several current e-mail and telephone scams that use the IRS name as a lure. The IRS expects such scams to continue beyond the tax filing season. The IRS cautioned taxpayers to be on the lookout for scams involving advance payment checks of the stimulus package. The goal of the scams is to trick people into revealing personal and financial information, such as Social Security, bank account or credit card numbers, which the scammers can use to commit identity theft .Typically, identity thieves use a victim’s personal and financial data to empty the victim’s financial accounts, run up charges on the victim’s existing credit cards, or apply for new loans, credit cards, services or benefits in the victim’s name, file fraudulent tax returns or even commit crimes. Most of these fraudulent activities can be committed electronically from a remote location, including overseas. Committing these activities in cyberspace allows scamsters to act quickly and cover their tracks before the victim becomes aware of the theft .People whose identities have been stolen can spend months or years and their hard earned money cleaning up the mess thieves have made of their reputations and credit records. In the meantime, victims may lose job opportunities, may be refused loans, education, housing or cars, or even get arrested for crimes they did not commit. The most recent scams brought to the IRS attention are:• Rebate Phone Calls – This phone call is a scam. The IRS does not force taxpayers to use direct deposit.• Refund e-Mail – In a new wrinkle, the current version of the refund scam includes two paragraphs that appear to be directed toward tax-exempt organizations that distribute funds to other organizations or individuals. The e-mail contains the name and supposed signature of the Director of the IRS’s Exempt Organizations business division. Filing a tax return is the only way to apply for a tax refund; there is no separate application form.• Audit e-Mail – Unusual for a scam email, it may contain a salutation in the body addressed to the specific recipient by name. Most scam e-mails seen by the IRS are sent using the same technique used by spammers, in which hundreds of thousands of messages are sent to potential victims based on internet address. Because of the volume, the typical scam e-mail is not personalized. This e-mail instructs the recipient to click on links to complete forms with personal and account information, which the scammers will use to commit identity theft . This e-mail is a phony. The IRS does not send unsolicited, tax account related e-mails to taxpayers.• Changes to Tax Law e-mail –This bogus

Information provided by the National Society of Tax Professionals