Since the dawn of the internet, cyber con artists have been on the constant lookout for the next hapless victim group.
For a time, the taxpayer community fell prey to phone scammers pretending to be the IRS and demanding payments of back taxes that are not really owed. Scammers then moved on to sending fake emails requesting payment or personal information from the recipient.
All in all, the IRS admits, scam victims have lost millions of dollars and loads of personal information via bogus IRS communications.
When asked about tax-related schemes, Joshua Ashman, partner at Expat Tax Professionals LLC, commented, “Scam artists very early caught on to the fact that individuals are naturally intimidated by the IRS or similar authoritative figures. This gives them a psychological edge over victims who often want to quickly and quietly resolve any tax issues.”
A look at the latest and greatest tax scams
In a recent consumer alert, the IRS warned taxpayers about the latest and greatest tax schemes, including:
The EFTPS Scam
In this scam, scammers call claiming to be from the IRS and say that letters were mailed to the taxpayer but were returned as undeliverable. The scammer then threatens arrest if a payment is not made immediately by a specific prepaid debit card. Victims are told that the card is linked to the Electronic Federal Tax Payment System, an online system for paying federal taxes, but really it is controlled by the scammer.
In this scam, scammers tell victims that if they do not call back, a warrant will be issued for their arrest. Those who do respond are told they must make immediate payment by phone.
Private Debt Collection Scams
In this scam, scammers pose as private collection agents, which is often persuasive, because the IRS in fact uses collection agencies to collect taxes that are past due.
The common thread between these scams? The target is the individual taxpayer – which makes sense given the lack of technical sophistication of the average target and the ability to manipulate victims by giving off a sense of authority and presenting a credible threat if the scammer’s demands are not followed.
The newest victim — tax preparers
Most recently, hackers and online scam artists have targeted an entirely new victim community – professional tax preparers.
What makes preparers such a juicy target?
In short, tax preparers have a wealth of information on many individuals stored on their systems, networks, emails, and whatever online means they use to store client information. A single hacked computer of a tax preparer is a virtual goldmine of information, including social security numbers, birth dates, tax information, driver’s license information, bank account information, credit card details, etc.
With this type of information on hundreds, if not thousands, of individuals, identity theft becomes that much easier for the hacker.
What can taxpayers do to protect themselves?
Joshua Ashman recommends taxpayers be vigilant about safekeeping the information they provide to tax preparers.
“When hiring tax help,” Mr. Ashman stated, “it’s best to find a preparer that has a method for securely storing and sending sensitive information. You should ask your preparer what security measures they take to keep your information safe. Our firm, for instance, uses so-called 256-bit SSL for file transfers and 256-bit AES encryption for file storage. This is the same security used by a number of banks and e-commerce sites such as Amazon. With so much client information at stake, we wouldn’t feel safe operating any other way.”
Staying a step ahead of technology thieves is no easy task. But with the right forethought and planning, you can stay ahead of the game and keep the bad guys at bay. Keeping your virtual doors locked and your online alarm systems armed are really the best ways to keep you and your information as safe as possible.
This post is part of our contributor series. The views expressed are the author's own and not necessarily shared by TNW.