Don't Mess With Taxes

You'd think after almost 18 months of dealing with COVID-19, we'd all be wise to related scams. Apparently, we aren't.

The coronavirus pandemic has been Christmas for con artists looking to cash in on all-too-common tales of woe and hardship, writes Los Angeles Times business columnist David Lazarus. He leads off his article with the tale of a crook impersonating the neighbor of a California couple.

In an email that looked to be from the neighbor's real online address, the crook invoked an extended family COVID tragedy. But while carefully crafted, the con wasn't quite slick enough to fool these targets.

When the phisher asked the couple to send him a gift card, they balked.

However, their skepticism in connection with questionable email isn't all that common.

Lazarus notes that the Federal Trade Commission received more than 2 million fraud reports from consumers last year, with so-called imposter scams cited the most. Fraud losses exceeded more than $3.3 billion in 2020.

And, of course, similar COVID scams have infiltrated the tax world.

Tax phishing keeps catching victims: "In a continuing twist on a common scam, the Internal Revenue Service, state tax agencies and tax industry [known collectively as the Security Summit] today warned tax professionals to beware of evolving phishing scams that use various pandemic-related themes to steal client data," the IRS announced on Aug. 10.

That IRS alert was part of this year's Security Summit theme, "Boost Security Immunity: Fight Against Identity Theft."

ID theft got top billing for the 2021 tax security push based on the numbers, which resemble the overall FTC fraud report.

The IRS says the number of data thefts reported by tax professionals have continued to climb. Through June 30, there have been 222 such data theft reports, outpacing the rate of 211 in 2020 and 124 in 2019.

Each report of a compromised tax professional can impact hundreds of taxpayers and threaten the tax pro's business, notes the IRS.

New pandemic ploys: The COVID-19 pandemic also is making it easier for many tax crooks.

"Identity thieves have been relentless in exploiting the pandemic and the resulting economic pain to trick taxpayers and tax professionals to disclose sensitive information," said IRS Commissioner Chuck Rettig. "Fighting back against phishing scams requires constant vigilance, and we urge tax pros to take some basic steps to help protect their clients and themselves."

Methods to protect public health have offered new routes for ID thieves, who've used teleworking practices and the economic downturn as fuel for a variety of tax-related scams and schemes.

Tech- and tax-savvy crooks target tax professionals, knowing that if they're able to compromise a preparer's office, they will have a trove of information at their disposal. Once the con artists either trick or hack their way into tax professionals' computer systems to access client data, they use the stolen client data to file fraudulent tax returns.

Worse, since the stolen information — taxpayer names, identification numbers, financial account specifics — is real, it's much more difficult for the IRS and state tax departments to detect the fraudulent filings up front.

Be careful, skeptical, and safe: So this year, the sixth annual tax security campaign, the IRS and its Security Summit partners urge tax professionals (and let me add taxpayers, too) to be even more vigilant when it comes to identity theft and security steps to stop it.

You can find many prior tax security tips, for taxpayers as well as pros, in the ol' blog's tax scams and identity theft categories. Yes, there are crossovers. If you're in a hurry, some of the notable ones are cited at the end of this post.

Also check out the IRS' 2021 Security Summit identity theft web page, which is updated as more ID theft prevention tips for tax pros and their clients are added.

Finally, use your common sense.

Take time before you react to any unsolicited email, regardless of how legit it might seem. If something seems the least bit off, trust your gut and follow up directly — not by replying to an email, clicking a link, or calling the number listed there — with the person who contacted you, be it a friend presumably in need or an IRS employee.

And definitely follow the general fraud protection advice that Robert Herrell, executive director of the Consumer Federation of California, relayed to Lazarus for his article: "Consumers need to be vigilant, especially when money is involved."

You also might find these items of interest:

• COVID-19 tax-related scams top IRS' Dirty Dozen 2021 list
• Don't fall for scary tax scams on Friday the 13th or any day
• IRS Dirty Dozen tax scam list for 2021, plus prevention and recovery options if you fell for any of them

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