Surge in tax scams prompts IRS to send out ID Verification Letters: Internet Scambusters #692
2016 looks like a record year for tax scams, as crooks try to exploit one of the key measures the IRS is using to try to verify the identity of some filers.
If you receive an ID Verification Letter, it's important to check its authenticity -- and we'll explain how in this week's issue.
We also have an alert on a bogus recovery program that crooks are using to scam victims for a second time.
Let's get started...
Is That ID Verification Letter Genuine or Another Tax Scam?
Tax scams have become a year-round activity for crooks, turning them into what is probably the biggest individual con trick of them all.
But once the tax-filing season gets underway, the pace picks up even faster, prompting the IRS, the Treasury, and consumer and law enforcement agencies to issue a stern warning about the risks of being scammed.
We've written about most of the tricks several times before. It's worth checking out a couple of our earlier issues because they're still totally relevant.
Outside the main filing season, most of them involve threatening phone calls, telling victims they owe unpaid taxes and that if they don't pay up pronto, the sheriff is going to be around in the next hour to arrest them and throw them in jail.
Once tax filing begins, the most common scam is the filing of fraudulent returns, usually as a follow-through to identity theft.
The IRS has become so concerned about the alarming rise in this crime that they're issuing what are called Identity Verification Letters or 5071C forms, where they suspect a possible fraudulent return.
The problem is that taxpayers who receive these might worry that the letters themselves are part of an identity theft ruse because they ask you to call a toll free number or visit a website to confirm identity.
These worries are entirely understandable because there is, in fact, a scam email currently making the rounds with the subject line "Identity Verification."
The message has an IRS logo and reads:
[Begin scam email text]
Kindly verify your information from a 1040 tax form that you filed within the last six years. Follow the reference below to verify your identity.
[End scam email text]
This is followed by a link that appears to be the genuine IRS website (www.irs.gov) but in fact takes you to a phony IRS page (actually based in Hungary) where you're asked to divulge personal tax account details.
The first thing to know is that the IRS does NOT send out verification requests by email, so if you get one, it's a scam. Nor does it telephone you without first sending out a 5071C letter.
Of course, this wouldn't prevent crooks from sending out a snail-mail letter with phony information in it, but at least they can't hide a crooked website address behind a legitimate one.
But, just to be sure, the correct verification website address is www.idverify.irs.gov. After you type that address in and hit the return/enter key, your browser address bar should automatically insert "https://" in front of it, indicating that you are on a secure website page.
You'll be taken to a series of pages that ask questions which the IRS says only the genuine taxpayer would be able to answer. Note: You may need to provide information from a prior return or other tax-related forms like a W-2 or 1099.
Beware of any address that looks very similar to the genuine one; using that tactic is a scammer's favorite trick. Unless it's exactly the one we've given, don't go there -- contact the IRS independently.
The same approach goes for the relevant phone number, which we are not publishing since we can't confirm it. The IRS appears not to have publicized the number because it says the line is frequently overloaded, so it's perhaps best and safer to visit the legitimate website.
However, a number of people have reported failing to accurately answer the online security questions, and have then successfully corrected this by using the phone service. Alternatively, you're advised to visit your nearest IRS office, taking proof of identity with you.
By the way, if you don't get a genuine request, there's no need to try to verify your ID using these services.
For more information read: Understanding Your 5071C Letter.
One other potential new tax scam to be aware of follows the signing into law last December of the use of private debt collectors to chase up unpaid taxes.
Against objections from consumer groups, the agency must now use private services for hard-to-collect bills.
The IRS has done this a couple of times before but tax scammers weren't as prevalent then as they are today.
Now there are worries that crooks will pose as private agencies and use heavy-handed tactics (not uncommon with some debt collectors) to force victims to hand over cash.
As of this writing, the IRS was required to enter into contracts with private collectors by March but so far there are no details of how taxpayers can confirm that an agency is legitimately working for the IRS.
Scambusters does not offer legal or financial advice so, if you owe back taxes, we suggest you work with an appropriate professional, such as an accountant or attorney, if you receive a payment demand from a third party.
In fact, one way or another, it looks like 2016 is going to be a big year for tax scams so please be vigilant and if in doubt or if you find you've been a victim of a fraudulent refund claim, get in touch with the IRS immediately.
Alert of the Week
If you're unfortunate enough to have been victim of a financial scam, don't fall for a crooked follow-up in which a scammer claims he/she will help you recover your money.
However desperate you may feel, if the caller wants an upfront fee, he's almost certainly a crook.
If you've been scammed, the only way you might get your money back -- if at all -- will be via police, courts or a government agency. And none of them charge for the service.
That's all for today -- we'll see you next week.