Phishing emails may also contain attachments that embed malicious codes and can harm your computer. Another tax scam involves promises that you can obtain a large Social Security refund or rebate. Even when you are legitimately owed a refund, criminals will inflate amounts in the tax return and steal the refund. Invest your money in certain shelters, they claim, and you’ll avoid paying taxes. However, these complex tax-avoidance schemes are often illegal, and the IRS prosecutes scammers who create and sell them, along with taxpayers who participate. If you are uncertain if a complicated tax product is legitimate, seek an independent opinion before getting involved.
In both cases, the goal is to convince them to click on a link, and submit their personal information to unlock their tax return or TurboTax account. Both whistleblowers said the lack of email verification routinely led to bizarre scenarios in which customers would complain of seeing other peoples’ tax data in their accounts. These were customers who’d forgotten their passwords and entered their email address at the site to receive a password reset link, only to find their email address tied to multiple identities that belonged to other victims of stolen identity refund fraud. Intuit, the makers of TurboTax, recently introduced several changes to beef up the security of customer accounts following a spike in tax refund fraud at the state and federal level. Here’s a look at some of the missteps that precipitated this mess, and what the company can do differently going forward. Some of the most frank and useful information about how to fight fraud comes directly from the mouths of the crooks themselves. Online cybercrime forums play a critical role here, allowing thieves to compare notes about how to evade new security roadblocks and steer clear of fraud tripwires.
The scam works best early in the income tax season, before the legitimate taxpayers have filed their returns. If you’re expecting a refund, file your return as early as possible to freeze out potential scammers. The data released by the Treasury Inspector General for Tax Administration , which oversees the work of the IRS, suggests the IRS does indeed appear to have improved at flagging and ultimately denying fraudulent federal tax returns. In an interim report on the 2014 tax filing season, TIGTA said the IRS identified and confirmed 28,076 fraudulent tax returns involving identity theft.
Other scammers claim they can use IRS forms to transfer funds from the Social Security Administration to the tax authorities. The victim, they claim, will get a check from the IRS, but that’s not likely to happen. The IRS also has a Federal Tax Return Preparer directory you can use to search for a tax preparer near you.
But management explicitly forbade us from either flagging the accounts as fraudulent, or turning off those accounts. In an interview today, Intuit’s leadership sidestepped questions about why the company still does not validate email addresses. But TurboTax Chief Information Security Officer Indu Kodukuladid say TurboTax will no longer display multiple profiles tied to a single email address when users attempt to reset their passwords by supplying an email address. Magee said ACTR also protested that tax prep firms like Intuit couldn’t legally share certain information about their customers with the states and the IRS. Representatives with ACTR did not respond to requests for comment. some sort of out-of-band verification for email addresses — sending an email or text to the customer with a personal identification number .
Additional scams the IRS has issued warnings for include “ghost tax preparers” who charge someone to do their taxes, often based on a large refund amount, and then fail to mail in the tax return — leaving the customer with an unfiled tax return and no refund. Intuit and other tax software companies have spent millions lobbying to make sure that the IRS doesn’t offer its own tax preparation and filing service. In exchange, the companies have entered into an agreement with the IRS to offer a “Free File” product to most Americans — but good luck finding it. If you omit the number or reverse a few digits on your tax return, the IRS rejects it out of hand. In addition to email phishing, some identity thieves are targeting tax professionals with voice phishing, or “vishing.” A common ploy is to pose as representatives from your electronic return originator, or ERO. The scammer may claim your software is corrupted or out of date, and then request remote access to your computer to update the software.
Don’t click that link, it could be malicious – Phishing emails usually contain malicious links that will take you to a spoofed site that asks you to enter you log on and account information. That’s why it’s always better to type the address of a website directly into your browser, so you know you’re going to the actual site and not a spoofed one. Intuit will provide you with instructions on how to stay current with your Intuit product, and it will provide you with information on how to securely download an update from your computer. It will never ask you for your banking or credit card information in an email. Also, it won’t ask for private information about your employees in an email. It will never send you an email asking you to send it your login or password information.
Prior to that shutdown, the IRS estimates that thieves used the data to steal up to $50 million in fraudulent refunds. That March story — Sign Up at IRS.gov Before Crooks Do It For You — tracked the nightmarish story of Michael Kasper, one of millions of Americans victimized by tax refund fraud each year. When Kasper tried to get a transcript of the fraudulent return using the “Get Transcript” function on IRS.gov, he learned that someone had already registered through the IRS’s site using his Social Security number and an unknown email address. But some states say they are encountering resistance to those efforts on nearly every front, from Uncle Sam to online tax vendors and from the myriad of financial firms that profit handsomely from processing phony tax refunds. A key component of cashing out tax return fraud involves recruiting unwitting or willing accomplices to receive the fraudulent refunds. Authorities across the United States this week arrested dozens of gang members who stand accused of making millions of dollars stealing consumer identities in order to file fraudulent tax refund requests with the Internal Revenue Service .
The purpose of a fraudulent tax return is, obviously, not to pay your back taxes, but to pocket your refund. This scam occurs early in the tax season, well before most taxpayers file.
How To Handle Tax Phishing Scams
The IRS also has a Directory of Federal Tax Return Preparers you can use to verify that a tax preparer is credentialed. Watch out for scammers who promise to file a return for you and get you a much larger tax refund than you’re entitled to.
- Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
- Are the house cleaner and the cashier not allowed to prepare and file their taxes for free because of their particular tax situations?
- With a Social Security number, they can file a tax return in your name and pocket the refund.
- According to the agreement between the IRS and the companies, anyone who makes less than $66,000 can prepare and file their taxes for free.
- The words can sound official, too, referring to a tax bill or promising a refund you’re not expecting.
Often, the tax scammers are hoping to connect with a newcomer to the US, someone who might not know how the IRS works. Some scammers actually demand a cash drop at a local business or other phony location, something the IRS would never do. The IRS impersonator might threaten deportation for nonpayment, another break with IRS procedure. To learn more about other tax scams and how to stay safe, visit TurboTax. Justin Elliott is a ProPublica reporter covering politics and government accountability. To securely send Justin documents or other files online, visit our SecureDrop page.
Keeping Yourself Safe From Tax Scams Today
“And then we have the banking industry, which is making a fortune off of this whole problem. Garrett, — Magee’s deputy commissioner — who had a $7,700 fraudulent return filed in his name after thieves created a duplicate TurboTax account with his personal information. Together, they are accused of operating a $14.3 million identity theft and tax fraud scheme.
Watch out for spoofed websites – Phony sites mimic real ones by copying company logos, images and site designs. Scammers have extremely sophisticated tools these days that can help them mask or change a web address. Which is why it’s critical to type the address of a website directly into the address bar of your browser instead of following a link from an email or internet search. Even search results from trusted search engines can lead you to a spoofed site. Be wary of spoofed email addresses – It’s easy for criminals to fake a From or Reply To address, either manually or with spam software, so never assume an email is real by looking at its header. You might receive a spoofed email that appears to be from Intuit that’s full of malicious links. Schedule a demotoday to see how you can protect your business from getting hooked by these types of phishing attempts.
For recent updates on the types of scams targeting taxpayers and tax professionals, visit the IRS page Tax Scams/Consumer Alerts. Watch out for emails that your ERO sends apparently out of the blue, especially if they claim you’re facing a security risk, and do not grant anyone remote access to your computer. Use anti-virus software to check any attachments you receive via email before opening them, and talk to new prospects on the phone to get a better sense of whether they are a legitimate client or not. Last year, she received several threatening, tax-scam calls on her voice mail, but simply opted not to return them. “It’s easier to recognize a scam on your voice mail,” Beristain says. “You aren’t put in the position of having to respond immediately.” One way to avoid phone scams is to let voicemail pick up calls from people you don’t know, especially during tax season.
You may have heard that wealthy business people keep financial accounts offshore, so if you get a call or email about moving money overseas, you might be tempted. However, this may be another of the top tax scams, trying to lure you into hiding money in offshore accounts or foreign trusts. If the scammer succeeds, the money is likely to stay hidden from you as well, and the IRS may prosecute you. Several years ago during a contentious election cycle in the South, people found fliers in their mailboxes informing them that their tax records were linked to the voting rolls, Erb said.
We went back to TurboTax.com and clicked on “FREE Guaranteed.” This time, we went through the process as a Walgreens cashier without health insurance, entering personal information and giving the company lots of sensitive data. We clicked and were relieved to see that filing for free was guaranteed. Companies that make tax preparation software, like Intuit, the maker of TurboTax, would rather you didn’t know. Remember that banks, financial institutions and tax authorities won’t ask for this information in unexpected phone calls or emails.
Phone calls demanding immediate cash payments are made by criminals who impersonate tax agents. These calls are so common; it’s likely you’ve been targeted at some point. This is called a refund anticipation loan, a short-term loan backed by an expected tax refund.
Tax scams don’t all look the same, but they are all intended to steal your money. Most fall into one of several categories of illicit acts, including phone scams, phishing and tax provider scams. Help yourself avoid these scams by knowing what kinds are out there and taking steps to keep your money safe. Remember, the IRS will never contact you via phone, email, fax or social media to request personal or financial data or demand immediate payment. If you’re unsure whether a mailed notice is genuinely from the IRS, call the agency to find out. Think of these scammers as wolves in sheep’s clothing who pose as legitimate tax preparers or professionals, but actually intend to steal your money. Taxpayers targeted in this case are often people who don’t speak English well or don’t fully understand the U.S. tax system, such as first-time tax filers.
Consumer groups have long argued that the IRS should offer its own free, online tax preparation and filing, as many other countries do. Intuit, QuickBooks, QB, TurboTax, ProConnect, and Mint are registered trademarks of Intuit Inc. Terms and conditions, features, support, pricing, and service options subject to change without notice. Phishing refers to fake email messages that pretend to be from a legitimate company. The messages are designed to trick the recipient into giving personal information to fraudsters or downloading a malicious attachment. We typically see a spike in these types of phishing emails during the tax season and consumers should be especially vigilant in the wake of continuous updates related to COVID-19.
Owing the IRS money is often a scary prospect, so it comes as no surprise that cybercriminals are also sending out emails claiming that a tax payment was deducted from the recipient’s bank account. On the same conference call, MacDougall can be heard asking Lyons why the company wouldn’t want to use security as a way to set the company apart from its competitors in the online tax preparation industry. For its part, Intuit maintains that it is well out in front of its competitors in voluntarily reporting to the IRS refund requests that the company has flagged as suspicious. The company also stresses that it has done so even though the IRS still has not promulgated rules that require TurboTax and its competitors to report suspicious returns — or even how to report such activity. Intuit executives say they went to the IRS three years ago to request specific authority to share that information. That recording was shared by Shane MacDougall, formerly a principal security engineer at Intuit.
If you have doubts about the legality of the schemes proposed, consider obtaining a second opinion. If you lost a family member from a disease or another tragedy, con artists can close in. These scammers target taxpayers who might want to make a tax-free donation to a particular charity.
For tax professionals everywhere, the move from physical paperwork to digital tax filing means that client privacy and cyber security are more important than ever. And while the Internal Revenue Service takes steps to protect your information from identity theft, that doesn’t mean that thieves stop trying to steal sensitive information. Watch out for scams and schemes this tax season to keep your clients’ information secure.
Did Turbotax Rip You Off?
To learn more about the run-up to this extraordinary step and other tax fraud trends this year, I talked withIndu Kodukula, chief information security officer at Intuit. Last week, KrebsOnSecurity published an exclusive interview with Indu Kodukula, Intuit’s chief information security officer. Kodukula explained that customer password re-use was a major cause of a spike this tax season in fraudulent state tax refund requests. The increase in phony state refund requests prompted several state revenue departments to complain to their state attorneys general. In response, TurboTaxtemporarily halted all state filings while it investigated claims of a possible breach.
NortonLifeLock, the NortonLifeLock Logo, the Checkmark Logo, Norton, LifeLock, and the LockMan Logo are trademarks or registered trademarks of NortonLifeLock Inc. or its affiliates in the United States and other countries. Android, Google Chrome, Google Play and the Google Play logo are trademarks of Google, LLC. Mac, iPhone, iPad, Apple and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. Alexa and all related logos are trademarks of Amazon.com, Inc. or its affiliates. Microsoft and the Window logo are trademarks of Microsoft Corporation in the U.S. and other countries. The Android robot is reproduced or modified from work created and shared by Google and used according to terms described in the Creative Commons 3.0 Attribution License. Intuit officials declined to address Lyons’ recorded comments specifically, although they did confirm that a company attorney led an employee WebEx meeting on the date the recording was made. We found literally millions of accounts that were 100 percent used only for fraud.