Avoid Tax Scams and Fraud

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Avoid Tax Scams and Fraud

Wednesday, April 22nd, 2009    Subscribe To Our Feed

IRS-Back-Taxes.info” href=”%3Ca%20href=”>FixTax.infohttp://fixtax.info”>FixTax.info> cautions you to please be cautious about entering into the latest tax scams. Avoid getting caught up in a new tax fraud disguised as a debt payment option for credit cards or mortgage debt. The fraud is also marketed as a way to reduce taxes or settle outstanding tax liabilities.If you want to do repair your credit or settle a tax matter you should be the one reaching out.Never respond to an unexpected email.  Check out YourPoorCredit.comhttp://yourpoorcredit.com”>YourPoorCredit.com> for credit score info and IRS-Back-Taxes.info” href=”%3Ca%20href=”>FixTax.infohttp://fixtax.info”>FixTax.info> for info regarding your tax problems.

This scheme involves filing Form 1099-OID, Original Issue Discount, and fake financial instruments such as bonded promissory notes or sight drafts.  Always use trusted professionals for credit repair or tax debt settlements.  The fraud has evolved from an earlier frivolous argument that a “strawman” bank account has been created at the Treasury Department for each U.S. citizen, and that an individual could use such “strawman” accounts to pay their debts and claim tax withholding credits.

The IRS addressed the “strawman” argument in Revenue Ruling 2005–21 and Revenue Ruling 2004-31, and discredits the use of this position for income tax purposes. Also, the courts that have reviewed this “strawman” argument and other similar arguments found them to be frivolous.

You should also be on the lookout for e-mails and phone calls you may receive claiming to come from the IRS or other federal agency and which mention their tax refund or economic stimulus payment. These are certainly a scam with the purpose of obtaining your personal and financial information, such as name, SSN, bank acct and credit card or even PIN numbers — from taxpayers which can be used by the thieves to commit. These emails and phone calls state that the IRS needs the info to process a refund or stimulus payment or deposit it into your bank account. The e-mail often contains links or attachments that appear to be the IRS Web site or an IRS “refund application form.” However genuine in appearance, these phonies are designed to elicit the information the scammers are looking for.

The IRS never sends taxpayers e-mails about their tax accounts. Additionally, the only way to get a tax refund or stimulus payment, or to arrange for a direct deposit, is to file a tax return. 

The IRS is taking these scams very seriously.  Some of the scams they say they’ve uncovered recently include:

* An e-mail scheme claiming to come from the IRS’s Criminal Investigation division tells the recipient that they are under a criminal probe for submitting a false tax return to the California Franchise Board. The e-mail seeks to entice people to click on a link or open an attachment to learn more information about the complaint against them. The e-mail link and attachment contain a Trojan Horse that can take over the person’s  computer hard drive and allow someone to have remote access to the computer.

*Another scheme suggests that a customer has filed a complaint against a company, of which the e-mail recipient is a member, and that the IRS can act as an arbitrator. This is aimed at businesses as well as individuals.

*One e-mail scam, fraught with grammatical errors and typos, looks like a page from the IRS Web site and claims to be from the “IRS Antifraud omission” (sic), a fictitious group. The e-mail claims someone has enrolled the taxpayer’s credit card in EFTPS and has tried to pay taxes with it. The e-mail also says there have been fraud attempts involving the taxpayer’s bank account. The e-mail claims money was lost and “remaining founds” (sic) are blocked. Recipients are asked to click on a link that will help them recover their funds, but the subsequent site asks for personal information that the thieves could use to steal the taxpayer’s identity.

*E-mails claiming to come from tax-refunds@ irs.gov, admin@ irs.gov and similar variations told the recipients that they were eligible to receive a tax refund for a given amount. It directed recipients to claim the refund by using a link contained in the e-mail which sent the recipient to a Web site. The site, a copy of the IRS Web site, displayed an interactive page similar to a genuine IRS one; however, it had been modified to ask for personal and financial information that the genuine IRS interactive page does not require.  The Treasury Inspector General for Tax Administration (TIGTA) has found numerous separate Web sites in at least 20 different countries hosting variations on this scheme.

*A bogus IRS letter and Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding) asked non-residents to provide personal information such as account numbers, PINs, mother’s maiden name and passport number. The legitimate IRS Form W-8BEN, which is used by financial institutions to establish appropriate tax withholding for foreign individuals, does not ask for any of this information.

Always deal with trusted professionals when attempting to fix a credit or tax problem.  You will normally be okay if you are the one reaching out to the professional as opposed to being contacting out of the blue.