Posts Tagged ‘Identity theft’

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Anti-Fraud Efforts by The IRS…

In Accounting & Finances,Business,Taxes on December 15, 2015 by Sufen Wang Tagged: , , , , ,

IRS Keeps on Truckin’ in Anti-Fraud Efforts with a W-2 Verification Code Test Drive

ID theft

Tis the Seasons!  Year end 2015 W-2s will be mailing out by January 31, 2016 and the IRS continues to wage war against identity thieves and other tax fraudsters via a Form W-2-Wage and Tax Statement-verification code pilot program. The program will test whether adding an authentication code on W-2 copies provided to employees will be “useful in evaluating the integrity of the W-2 data that taxpayers submit when they e-file their 1040s,” explained Scott Mezistrano of the IRS, during a payroll industry conference. Note the mention only of e-file: the code won’t be tried out on W-2s filed with paper Forms 1040, keeping in line with the IRS’s slow-but-sure transition to cyberspace.

Algorithm2The W-2 code dry run for tax year 2015 will be limited to a few, hand-picked payroll service providers (PSP), who will in turn hand pick some employer clients, whose employees will in turn receive W-2s with the brand spankin’ new codes on Copies B and C of the Form. Each code will be 16 characters long, like this – xxxx-xxxx-xxxx-xxxx – and will be generated by each PSP using a special IRS-provided algorithm. The kicker is that the algorithm will use certain data points from the W-2 to generate the code. So after the employee enters their unique code on their e-filed tax form, the IRS can check to make sure it matches the data on the Form W-2.

Form W2Since this is just a W-2 verification pilot program, no employee will get penalized if they forget to include their code or they submit the wrong one when they e-file. Their returns will be processed per the usual, along with their refunds. And while the trial will be limited in scope, don’t be surprised if you get a substitute Form W-2 with a verification code on it. While you aren’t obligated to partake in entering the code, your participation could end up helping other honest taxpayers down the road. If the process is successful, by as early as 2017 all Form W-2s could be updated to include a verification code box.

StolenIdentityConsidering the less-than-stellar quality of the IRS’s identity theft victim customer service, let’s hope the W-2 anti-fraud program does work out. All an identity thief really needs is your name, date of birth, Social Security Number, and no conscience whatsoever. Using your personal info, the criminal will file a tax return using fake W-2 information to try to get themselves – not you – as big of a refund as possible. If the trial is a home run, the W-2 verification program would make the lives of these low-lives a lot harder because they would need to enter the magic code that matches the W-2 data.

Sufen Wang, M.S.Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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IRS Impersonation Scams

In Accounting & Finances,Business,Taxes on December 15, 2015 by Sufen Wang Tagged: , , , ,

IRS Impersonation Scams Running Rampant: Watch out for New Tricks from Con Artists

TaxScamScamming just isn’t what it used to be – it’s a whole lot worse. As technology has evolved, so has the way people use it to exploit other people, and a lot of the time, the victims are taxpayers. Since October 2013, at least 4,000 people have lost more than $20 million collectively from tax scams. As such, the IRS has issued another warning for taxpayers to keep their eyes and ears wide open for any suspicious phone calls, e-mails, or letters.

CardTrickTax scammers have some new tricks up their sleeves and everyone is their target. One ruse is to alter the number that appears on the taxpayer’s telephone caller ID so it looks they’re getting a bona fide call from the IRS or other agency. The scammers keep the act up by spewing fake names, titles, and badge numbers, all to make themselves sound legit.

ScamsSometimes, the scammers will be so kind as to give their victims step-by-step instructions on how they can make the “required” payment, e.g. by going to a nearby bank and getting a debit card. And recently, some scammers have been giving out actual IRS addresses where the victims can mail their payment receipt. Little do the taxpayers know that their money is going straight into the pockets of thieves!

Threatening2On the one hand, these scams work because the fake correspondence often looks and seems official to unsuspecting taxpayers – con artists will even send e-mails and letters using official IRS letterhead. The scams also succeed because taxpayers get scared – scammers rely heavily on fear tactics, such as threatening to call the police, to make people react immediately and shell out money without thinking twice.

The real IRS will NEVER call you about taxes owed without first mailing a Notice, then another Notice, then a bill, etc. etc.  The IRS will NEVER ask for credit or debit card numbers over the phone; and will NEVER demand taxes without giving the taxpayer the chance to question the amount owed. If you get a weird call from someone claiming to be from the IRS, HANG UP and call the IRS back from your end at 1-800-829-1040. Also remember that the official IRS website is IRS.gov – if it doesn’t have .gov at the end, get out of there quick!

Sufen Wang, M.S.Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

 

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$1.6 Billion Down, Only $3.6 Billion to Go:

In Accounting & Finances,Business,Taxes on November 25, 2013 by Sufen Wang Tagged: , , , , ,

taxfraudTIGTA Reports on Fraudulent Tax Refunds
The Treasury Inspector General for Tax Administration (TIGTA) recently released some great news: the IRS issued $3.6 billion in fraudulent tax returns in 2011.

Um. I know, that’s a whopping amount of money that should not have been handed out. But it is a pleasant change of pace from the $5.2 billion reported for tax year 2010 to a $3.6 billion in 2011.

handmoneyDespite the “improvement,” the IRS needs to step up its game and fix lingering problems identified by TIGTA. For example, a handful of tax refunds depositing to the same bank account should be a bright red flag. Apparently the IRS is color blind. But $3.6 billion is a little bit harder to ignore.

identity_theftAnd the agency does seem to lose track of time when it comes to identify theft cases. TIGTA reported that it took the IRS about 312 days to resolve tax-related identity theft cases. That’s like an anniversary… So the million dollar – well, actually billion dollar – question is what will the IRS do about these numbers?

Sufen Wang, M.S.Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (562) 806-5805

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Whistleblowers Wanted:

In Accounting & Finances,Business,Education,Taxes on January 27, 2013 by Sufen Wang Tagged: , , , , , , ,

MH900084382Report Suspected Tax Fraud

To catch a thief, the IRS needs your help. If you suspect someone might be bending certain tax laws, don’t just stand there – do something! There’s a variety of tax frauds, so the IRS has conveniently created a chart to explain which form you’ll need to fill out in order to make the tax world a better place.

Direct your pen to Form 3949-A, Information Referral, if you suspect an individual/business of false exemptions or deductions, kickbacks, false/altered documents, failure to pay taxes, unreported income, failure to withhold, or organized crime. Then congratulate yourself on doing the right thing.

MH900422392Identity theft is also a type of tax fraud. If you believe that someone is posing as you and has used your SSN for employment purposes or to file a tax return, pick up Form 14039, Identity Theft Affidavit. The sooner you submit the form, the sooner the impostor will be caught.

Maybe your friendly neighborhood tax preparer has been getting rich a little too quickly. If you suspect fraudulent activity or an abusive tax scheme by a tax return preparer/company, report it on Form 14157. You’ll need both this form and Form 14157-A if you also think a tax return preparer filed or altered your return without your consent.

If you have information about a suspicious tax promotion or promoter, whip out Form 14242 and show that fake promotion who’s boss. And finally, if you notice misconduct or wrongdoing by an exempt organizationor employee plan, complain about it on Form 13909, Tax-Exempt Organization Complaint (Referral) Form.

MH900383616Reporting tax fraud is a good deed and should be reward enough by itself. However, for anyone who needs extra motivation, check out Form 211, Application for Award for Original Information. Sometimes it pays to be a whistleblower.  Do the right thing, it is hard, but it is very, very rewarding!!!

 

Sufen Wang, M.S.Accountancy

Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

 

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Smartphone Users Beware!

In Accounting & Finances,Business,Culture,Education,Entertainment on November 4, 2012 by Sufen Wang Tagged: , , , , ,

 Your Identity is at Risk

Smartphones got their name for a reason: they let us send e-mails, login to social networks, buy products, check our bank account balance, and do countless other things – all from the palms of our hands. Thus, it’s not an exaggeration to say that for many people, their smartphone is their life. After all, it contains all of their most important personal information.

You probably know where this is going. While it’s a good thing to have your credit cards, contacts, passwords, etc. all on one handy-dandy device, it becomes a really bad thing if you lose your phone. Whereas in the past an identity thief would have to break into your house and steal a huge stack of papers from your file cabinet, now all they have to do is turn the phone on that you accidentally left at the bus stop.

That’s probably why a recent study by Javelin Research found that smartphone users are 33% more likely to become victims of identity theft than non-users. And things are made worse by the fact that 62% of smartphone users don’t use password protection. If you think it’s annoying to enter a pin whenever you use your phone, just think how much more annoying it will be to change every single password and to deal with fraudulent debts on your credit. Secure your smartphone with a pin – preferably something more difficult to guess than “1234.”

You should also be wary of any apps you download. Many have access to all of your personal files – right down to your billing address and Visa number – and they can even install malware on your phone. In fact, you might consider getting an antivirus just to be safe. Either way, make sure you always surf reputable sites and that they have a “padlock”symbol (meaning they are SSL secure) when you’re entering any financial information.

Speaking of security, never connect to open Wi-Fi connections on your smartphone. If you plug into the wrong network even for a minute, you’re basically giving hackers your personal information on a silver platter. And finally, cover your back by clearing your tracks: don’t store login information for websites on your phone. If you’re smart about your smartphone, you can outsmart anyone who wants to steal your identity.

On the Money, Sufen Wang, Wang Solutions

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The Return of the Dirty Dozen…

In Accounting & Finances,Business,Taxes on March 2, 2012 by Sufen Wang Tagged: , , , , , , ,

Another Dirty Dozen: The Top 12 Tax Scams of 2012
 
As long as there are taxes, there are going to be scams. A lot of money gets moved around in April and a lot of people want to get their hands on it – illegally. If you’re one of those people, you’ll probably be in jail sometime soon. Luckily, the IRS’ “Dirty Dozen” – the list ranking scams taxpayers are most likely to get sucked into – is back. Let’s see how things have changed since we brought you the “Dirty Dozen” last year.
 
The new leader of the IRS’ “Dirty Dozen” is Identity Theft. This is a growing problem in which somebody uses a real taxpayer’s personal information to file a return and then receives the refund. If that sounds like a good idea to you, just know that the IRS is cracking down on this particular scam with law-enforcement. There’s even a special web page to help taxpayers spot when somebody is pretending to be them. So how do you know if your name is being used elsewhere? If you get an IRS notice telling you that you filed more than one return, you could be a victim of identity theft.
 
Close behind is Phishing. This does not have to do with going out on a boat and catching things in the water. This is actually when a scammer uses a fake website or email to steal your personal information – which they can then use for the big bad identity theft. Always check that you’re on the real IRS site (the address should contain irs.gov) and since the IRS doesn’t send out any e-mails, don’t open anything that is supposedly from the agency or the Electronic Federal Tax Payment System (EFTPS). Oh, and don’t post your social security number on the “IRS” Facebook page.
 
Remember that post a few weeks ago about finding the right preparer? It was supposed to help you avoid becoming a victim of scam number three, Return Preparer Fraud. These corrupt preparers will do anything, from stealing part of your return, to charging you outrageous fees. Make sure your preparer includes his/her signature and PTIN on your return, and walk away if they tell you to include false information.
 
You really can’t get away from Hiding Income Offshore. The number one scam on last year’s “Dirty Dozen” list, evading taxes by storing your assets out of the United States, continues to be a huge problem. That’s not to say that you can’t keep stuff overseas – you just have to tell the IRS about it. If you’ve had a change of heart and want to stop being a scammer, the Offshore Voluntary Disclosure Program is still going on.
 
The above are the most prevalent issues, but there’s still a lot of scamming going on at the bottom of the list. Don’t pay attention to people offering advice – for a fee – about how to get “Free Money” from the IRS & Tax Scams Involving Social Security. You’ll be paying money for a claim that is eventually going to get rejected by the IRS. And don’t think you can get away with penning in False/Inflated Income and Expenses on your tax return. Although it might seem easy to claim income or expenses you didn’t really pay, so that you can receive refunds like the EITC, you’ll face interest and penalties when you do get caught.
 
The same goes for False Form 1099 Refund Claims. Filing a fake information return to verify a fake refund claim will result in real problems for you. And don’t listen to Frivolous Arguments about why you don’t need to pay taxes. Pay first, and then if you have a problem, bring it up in court later. You also need to pay the correct amount that you owe, so don’t Falsely Claim Zero Wages. 
 
Perhaps the dirtiest scam on the Dirty Dozen is Abuse of Charitable Organizations and Deductions. Yes, people will do things like “improperly shield income or assets from taxation” and “maintain control over donated assets.” Charities are for you to help other people – not yourself. The penultimate scam, Disguised Corporate Ownership, is when the true ownership of a business is obscured. Last but not least is Misuse of Trusts. Promoters will convince taxpayers to transfer their assets into trusts, promising less income subject to taxation or reduced estate taxes. In reality, this is just a fancy way of avoiding tax liability.
 
The IRS is watching you.
 
 
On the Money,
Sufen Wang
Wang Solutions
 

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