Online Scams that Impersonate the IRS
FS-2010-9, January 2010
WASHINGTON — Consumers should protect themselves against online identity theft and other scams that increase during and linger after the filing season. Such scams may appropriate the name, logo or other appurtenances of the IRS or U.S. Department of the Treasury to mislead taxpayers into believing that the scam is legitimate.
Scams involving the impersonation of the IRS usually take the form of e-mails, tweets or other online messages to consumers. Scammers may also use phones and faxes to reach intended victims. Some scammers set up phony Web sites.
The IRS and E-mail
Generally, the IRS does not send unsolicited e-mails to taxpayers. Further, the IRS does not discuss tax account information with taxpayers via e-mail or use e-mail to solicit sensitive financial and personal information from taxpayers. The IRS does not request financial account security information, such as PIN numbers, from taxpayers.
Object of Scams
Most scams impersonating the IRS are identity theft schemes. In this type of scam, the scammer poses as a legitimate institution to trick consumers into revealing personal and financial information — such as passwords and Social Security, PIN, bank account and credit card numbers — that can be used to gain access to and steal their bank, credit card or other financial accounts. Attempted identity theft scams that take place via e-mail are known as phishing. Other scams may try to persuade a victim to advance sums of money in the hope of realizing a larger gain. These are known as advance fee scams.
Who Is Targeted
Anyone with a computer, phone or fax machine could receive a scam message or unknowingly visit a phony or misleading Web site. Individuals, businesses, educators, charities and others have been targeted by e-mails that claim to come from the IRS or Treasury Department. Scam e-mails are generally sent out in bulk, based on e-mail addresses (urls), similar to spam.
How an Identity Theft Scam Works
Most of the scams that impersonate the IRS are identity theft scams. Typically, a consumer will receive an e-mail that claims to come from the IRS or Treasury Department. The message will contain an enticing or intimidating subject line, such as tax refund, inherited funds or IRS notice. Usually, the message will state that the recipient needs to provide the IRS with information to obtain the refund or avoid some penalty. The message will instruct the consumer to open an attachment or click on a link in the e-mail. This may lead to an official-looking form to be filled out online or send the taxpayer to a seemingly genuine but bogus IRS Web site. The look-alike site will then contain a phony but genuine-looking online form or interactive application that requires the personal and financial information the scammer can use to commit identity theft.
Alternatively, the clicked link may secretly download malware to the consumer’s computer. Malware is malicious code that can take over the computer’s hard drive, giving the scammer remote access to the computer, or it could look for passwords and other information and send them to the scammer.
Phony Web or Commercial Sites
In many IRS-impersonation scams, the scammer sends the consumer to a phony Web site that mimics the appearance of the genuine IRS Web site, IRS.gov. This allows the scammer to steer victims to phony interactive forms or applications that appear genuine but require the targeted victim to enter personal and financial information that will be used to commit identity theft.
The official Web site for the Internal Revenue Service is IRS.gov, and all IRS.gov Web page addresses begin with http://www.irs.gov/.
In addition to Web sites established by scammers, there are commercial Internet sites that often resemble the authentic IRS site or contain some form of the IRS name in the address but end with a .com, .net, .org or other designation instead of .gov. These sites have no connection to the IRS. Consumers may unknowingly visit these sites when searching the Internet to retrieve tax forms, publications and other information from the IRS.
Frequent or Recent Scams
There are a number of scams that impersonate the IRS. Some of them appear with great frequency, particularly during and right after filing season, and recur annually. Others are new.
- Refund Scam — This is the most frequent IRS-impersonation scam seen by the IRS. In this phishing scam, a bogus e-mail claiming to come from the IRS tells the consumer that he or she is eligible to receive a tax refund for a specified amount. It may use the phrase “last annual calculations of your fiscal activity.” To claim the tax refund, the consumer must open an attachment or click on a link contained in the e-mail to access and complete a claim form. The form requires the entry of personal and financial information. Several variations on the refund scam have claimed to come from the Exempt Organizations area of the IRS or the name and signature of a genuine or made-up IRS executive. In reality, taxpayers do not complete a special form to obtain their federal tax refund — refunds are triggered by the tax return they submitted to the IRS.
- Lottery winnings or cash consignment — These advance fee scam e-mails claim to come from the Treasury Department to notify recipients that they’ll receive millions of dollars in recovered funds or lottery winnings or cash consignment if they provide certain personal information, including phone numbers, via return e-mail. The e-mail may be just the first step in a multi-step scheme, in which the victim is later contacted by telephone or further e-mail and instructed to deposit taxes on the funds or winnings before they can receive any of it. Alternatively, they may be sent a phony check of the funds or winnings and told to deposit it but pay 10 percent in taxes or fees. Thinking that the check must have cleared the bank and is genuine, some people comply. However, the scammers, not the Treasury Department, will get the taxes or fees. In reality, the Treasury Department does not become involved in notification of inheritances or lottery or other winnings.
- Beneficial Owner Form — This fax-based phishing scam, which generally targets foreign nationals, recurs periodically. It’s based on a genuine IRS form, the W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. The scammer, though, invents his or her own number and name for the form. The scammer modifies the form to request passport numbers, information that is often used for account security purposes (such as mother’s maiden name) and similar detailed personal and financial information, and states that the recipient may have to pay additional tax if he or she fails to immediately fax back the completed form. In reality, the real W-8BEN is completed by banks, not individuals.
Other Known Scams
The contents of other IRS-impersonation scams vary but may claim that the recipient will be paid for participating in an online survey or is under investigation or audit. Some scam e-mails have referenced Recovery-related tax provisions, such as Making Work Pay, or solicited for charitable donations to victims of natural disasters. Taxpayers should beware of an e-mail scam that references underreported income and the recipient’s “tax statement,” since clicking on a link or opening an attachment is known to download malware onto the recipient’s computer.
How to Spot a Scam
Many e-mail scams are fairly sophisticated and hard to detect. However, there are signs to watch for, such as an e-mail that:
- Requests detailed or an unusual amount of personal and/or financial information, such as name, SSN, bank or credit card account numbers or security-related information, such as mother’s maiden name, either in the e-mail itself or on another site to which a link in the e-mail sends the recipient.
- Dangles bait to get the recipient to respond to the e-mail, such as mentioning a tax refund or offering to pay the recipient to participate in an IRS survey.
- Threatens a consequence for not responding to the e-mail, such as additional taxes or blocking access to the recipient’s funds.
- Gets the Internal Revenue Service or other federal agency names wrong.
- Uses incorrect grammar or odd phrasing (many of the e-mail scams originate overseas and are written by non-native English speakers).
- Uses a really long address in any link contained in the e-mail message or one that does not start with the actual IRS Web site address (http://www.irs.gov). The actual link’s address, or url, is revealed by moving the mouse over the link included in the text of the e-mail.
What to Do
Taxpayers who receive a suspicious e-mail claiming to come from the IRS should take the following steps:
- Avoid opening any attachments to the e-mail, in case they contain malicious code that will infect your computer.
- Avoid clicking on any links, for the same reason. Alternatively, the links may connect to a phony IRS Web site that appears authentic and then prompts for personal identifiers, bank or credit card account numbers or PINs.
- Visit the IRS Web site, www.irs.gov, to use the “Where’s My Refund?” interactive tool to determine if they are really getting a refund, rather than responding to the e-mail message.
- Forward the suspicious e-mail or url address to the IRS mailbox firstname.lastname@example.org, then delete the e-mail from their inbox.
Consumers who believe they are or may be victims of identity theft or other scams may visit the U.S. Federal Trade Commission’s Web site for identity theft, http://www.OnGuardOnline.gov,, for guidance in what to do. The IRS is one of the sponsors of this site.
More information on IRS-impersonation scams, identity theft and suspicious e-mail is available on IRS.gov.
Page Last Reviewed or Updated: October 15, 2010
The Baltimore Sun Personal Finance Column:
Tax Credit Sparks Potential Homebuyers' Questions
November 10, 2009 (The Baltimore Sun, Maryland) -- As soon as Congress passed legislation to expand the $8,000 first-time homebuyer credit, readers started sending in questions about whether they would qualify under the new rules.
The legislation, signed into law last week, gives people more time to purchase a house and allows even current homeowners to receive a credit of up to $6,500 if they buy a new principal residence to replace the old one. It raises the income limits so more buyers qualify.
The new law also addresses concerns about fraud after a recent report found that the Internal Revenue Service had paid out millions in homebuyer credits to thousands of ineligible people, including some 4-year-olds. You now must be a certain age to get the credit and prove you bought a house.
Here are some answers on the expanded credit:
Who is eligible for the $6,500 credit?
This is for certain homeowners buying a new primary residence. Retirees downsizing are likely beneficiaries, says Mark Luscombe, principal tax analyst with CCH, a provider of tax information. You must have lived in your house for at least five years in a row any time during the eight years before the purchase of the new house.
The credit is worth 10 percent of the purchase price, not to exceed $6,500. Spouses filing separate tax returns can claim up to $3,250 each.
What's the new deadline?
To get the $8,000 or $6,500 credit, you must contract to buy the house by April 30, 2010, and the sale must close by June 30, 2010.
What are the new income limits?
You will be eligible for the full credit if you're buying a house after Nov. 6 and your income is up to $125,000 for singles and $225,000 for married joint filers. The credit starts phasing out thereafter and disappears once income exceeds $145,000 for singles and $245,000 for joint filers.
Are there other restrictions?
You cannot claim the $8,000 or $6,500 credit if you buy a house for more than $800,000. You must be 18 years old, or at least your spouse must be 18 or older. You can't get the credit if you are claimed as a dependent by another taxpayer, says Mark Steber, chief tax officer of Jackson Hewitt Tax Service.
What documentation must I submit?
The IRS was criticized for handing out more than $139 million to filers who claimed the credit but hadn't bought a house yet. Now, you must attach a copy of the settlement statement with your tax return as proof of purchase.
How can I claim the credit?
If you buy a house this year, you can amend your 2008 tax return to claim the money early. Similarly, if you buy a house in 2010, you can claim the credit on your 2009 tax return, Luscombe says.
It now takes 12 weeks to 16 weeks to receive the money by amending a return. Steber suggests taxpayers might as well wait to claim the credit on their 2009 return than file an amended return.
What changes were made for members of the military?
Homebuyers must repay the credit if they sell the house within three years. But service members who sell their house because of a job transfer won't have to repay the money because of changes last week, says Jo Willetts, Jackson Hewitt's senior manager of tax resources.
Also, service members who are serving outside the United States will get an extra year to buy a house and claim the credit, Luscombe said.
If I was ineligible for a full or partial credit because of my income before, could I now claim the credit because of the higher limits?
The new income limits apply only to purchases after Nov. 6. Earlier purchases fall under the old rules, where the credit starts to phase out once income reaches $75,000 for singles and $150,000 for married joint filers.
I purchased a house in early 2005 that my wife and I are now selling. Can I obtain the new $6,500 credit? I'm close to the five-year mark but will be a couple of months off.
Steber says "The code is clear about the five-year timing. Unless you can put off the closing for another four months, you will not currently qualify for the credit."
Planning Year-End Tax Strategies in a Down Year
November 16, 2009 (The Dallas Morning News) -- DALLAS - Year-end tax planning this year will be different from years past, largely because of the recession.
For many taxpayers, the year has meant a job loss, a job with less income or perhaps a home foreclosure.
There also have been government stimulus programs that have added to taxpayers' take-home pay or given some homebuyers a tax credit.
All these need to be taken into account.
"Things are different this year for a lot of people in situations they've never been into before because of the economic times," said Jimmy Averitt, tax partner at accounting firm BDO Seidman LLP in Dallas.
"Those need to be assessed before the end of the year and compared with what occurred in prior years to get a handle on what their tax situation is," he said. "You need to be doing that right now."
Here are the possible tax implications of scenarios created by the ailing economy:
Generally, if you owe a debt to someone and they cancel or forgive that debt, the canceled amount may be taxable.
However, the government offers a tax break to help homeowners who lost their home to foreclosure. Under the law, a taxpayer whose principal residence was foreclosed on does not have to claim the amount of debt canceled as income.
Debt reduced through a loan modification also is exempt. A loan modification makes mortgage payments more affordable by reducing the interest rate or lengthening the term of a mortgage.
Up to $2 million of forgiven debt is eligible for this exclusion; the limit is $1 million for married couples filing separate tax returns. The provision applies to debt forgiven in 2007 through 2012.
If you've been laid off, your taxable income could "well be significantly lower when you start taking into account exclusions and dependency deductions," Averitt said.
That could leave you in a situation where your tax deductions exceed your income.
If your deductions exceed your income and you need money, you could tap your retirement plan if you're over age 59 Averitt said. In those cases, the tax paid on the withdrawals will be largely offset by your deductions, he said.
If you're younger than 59 and make withdrawals from your retirement plan, you'd have to pay a 10 percent penalty on top of the tax owed. That's why James A. Smith, a certified public accountant in Dallas, says tap your retirement funds only as a last resort.
"I also don't advocate starving to death," said Smith, managing director at Smith, Jackson, Boyer & Bovard, PLLC.
Conventional wisdom says to defer income and accelerate deductions to reduce your federal income tax. But Averitt said that for many people who have seen their family incomes slashed, this may be the year to go against conventional wisdom.
That could mean deferring some deductions, such as local property taxes, until next year, when your income could be greater.
If you've been collecting unemployment, know that for 2009, the first $2,400 of unemployment compensation is excluded from tax. All unemployment compensation beyond the first $2,400 is taxable.
If you're hunting for a job, keep track of the miles you drive, fees you pay for parking or tolls, employment agency fees, resume preparation fees, long-distance calls and other costs associated with your search. You may be able to claim these expenses as a miscellaneous deduction on your tax return.
The larger paycheck you received tied to the Obama stimulus plan could end up taking a bite out of your federal income tax refund, or even leave you owing taxes, observers says.
The stimulus plan lowered federal income tax withholding rates, which results in more take-home pay and less money going toward taxes. The downside is some taxpayers may end up with not enough taxes being withheld to cover what they owe in 2009.
As a result, some taxpayers may need to increase their withholding amount by reducing the number of allowances claimed on their W-4 form.
However, with so little time left this year, the impact of making such a change may be muted.
Single taxpayers working at more than one job and married couples filing jointly where both spouses work are the most likely groups of taxpayers to be caught short, tax experts said.
Taxpayers who have concerns about whether their withholding amounts need to be adjusted can use the withholding calculator at the Internal Revenue Service's Web site to determine their correct level of withholding.
Congress has expanded and extended until April 30 a popular credit for first-time homebuyers. The $8,000 tax credit would have expired Nov. 30.
"You can claim the credit on your 2009 tax return as long as you have a binding contract by the end of April and you close by the end of June," said Neil Allen, spokesman for CCH, which provides tax and accounting software and services for tax professionals.
If you file your return before you close on the purchase, you can file an amended return to claim the credit.
The program was expanded to include up to a $6,500 tax credit for existing homeowners wanting to move up to a new home, as long as they have lived in their current residence for five consecutive years out of the last eight.
If you buy a new vehicle by Dec. 31, you can deduct state and local sales taxes paid on up to $49,500 of the purchase price, whether you itemize or not.
The tax break starts to phase out if your modified adjusted gross income is $125,000 or more for single taxpayers and $250,000 or more for joint filers.
© (c) 2009, The Dallas Morning News. Distributed by Mclatchy-Tribune News Service.
Weakening Global Economy and Growing Financial Pressures are Increasing CEO Concerns over Risk and Balance Sheets, as HR Issues Lose Attention
Dec. 8, 2008 (SmartPros) — Although CEOs worldwide are still very concerned about executing their corporate strategy, concerns about finances, risk management and confidence in the business community are growing in importance to them, reflecting today's highly uncertain economy, according to a global survey of chief executives released by The Conference Board.
The survey – issued by The Conference Board in CEO Challenge 2008-Financial Crisis Edition – features an analysis of the matched sample of responses of 190 CEOs, chairmen, and company presidents who participated in The Conference Board CEO Challenge 2008 survey fielded in July and August, and then took the time to fill out the survey a second time in October, following the recent economic downfall emanating from Wall Street.
When asked to rate their greatest concerns from among 94 different challenges, the matched sample of chief executives participating in this year’s survey chose excellence of execution as their top challenge for the second year in a row. But 46.7 percent of survey participants – up from roughly half that (24.5 percent) in the summer – were most concerned about speed, flexibility and adaptability to change.
Global economic performance (44.6 percent) and financial risk including liquidity, volatility and credit risk (43.8 percent) were the fourth and fifth most pressing concerns, but were not in the Top 10 list of concerns in the summer survey. Business confidence also jumps into the Top 10, moving up 25 ranks from 34th out of 94 challenges to 9th. Those rating business confidence as being one of their “greatest concerns” rose four-fold from 9.1 percent in July/August to 36.3 percent in October.
“The CEO mindset is focused and the atmosphere is intense,” says Jonathan Spector, Chief Executive Officer of The Conference Board. “Clearly, weakening economic conditions are a growing concern to CEOs worldwide, as they plan their business strategies and financial targets for the coming year.”
There were no people management issues in the Top 10 in the latest survey, and, among them, only efficiency and health-care costs gained in relative importance from July/August.
Says Spector: “Business leaders across the globe are focusing more urgently on execution and immediate bottom-line issues, and leaving the people management systems built up during the tight labor market of the past five years to operate how they are intended.”
Consistent execution of strategy by top management ranked second in the latter study (with 47.0 percent of CEOs assigning it the highest challenge rating), followed by speed, flexibility, adaptability to change (46.6 percent), and global economic performance (44.6 percent).
Worries over the global economic environment are rising among CEOs in Europe and Asia. Fifty-one percent (51.7 percent) of CEOs in Asia (up from 20.7 percent in the summer) cite global economic performance as being among their “greatest concerns,” while 60 percent of CEOs in Europe, the top ranking (up from 24.4 percent), cite global economic performance as being of “greatest concern.”
In the U.S., concern about the global economy rose from 7 percent to 21 percent – the 16th most pressing issue – in the latest survey.
Respondents to The Conference Board CEO Challenge Survey are asked to rate the magnitude that each challenge poses over the next 6-12 months on a scale of 0 (not applicable) to 5 (my greatest concern).
The Conference Salary Budget Increase Survey
The drawn-out financial crisis and forecast of continuing negative economic growth in 2009 are also impacting compensation decisions in real-time, according to another survey re-fielded by The Conference Board.
In June 2008, The Conference Board released the results from its annual Salary Budget Increase survey. By the second week of October, multiple requests asking for a special mid-year survey prompted a re-fielding of this survey as well. One-quarter (24.8 percent) of the 327 respondents report that their 2009 salary increase budget has changed since it was first approved. And many among those responding to both the original survey in April/May and re-fielded October survey are making notable downward adjustments. For example, the median salary budget increase for executive merit pay dropped from 3.70 percent to 3.50 percent over the six-month April/May to October time period.
CEO Challenge 2008: Top 10 Challenges—Financial Crisis Edition
Research Report #1440-08 RR, The Conference Board
Special Salary Budget Increase Survey Results: Respondents' Edition November 2008, The Conference Board.
© 2008 SmartPros. All Rights Reserved.
Longer Resumes OK, Says Survey
March 21, 2007 (SmartPros) — The "keep your resume to one page" rule may be on its way out, a new Accountemps survey suggests. While more than half (52 percent) of executives polled believe a single page is the ideal length for a staff-level resume, 44 percent said they prefer two pages.
That compares to 25 percent polled a decade earlier who cited two pages as the optimal resume length; 73 percent of respondents preferred a single page at that time.
In another poll, respondents also seemed more receptive to longer resumes for executive roles. Only 7 percent said the ideal length is one page, whereas 61 percent said two pages, and 31 percent said three pages.
Both national polls include responses from 150 senior executives -- including those from human resources, finance and marketing departments -- with the nation's 1,000 largest companies.
"Many employers are willing to spend a little more time reviewing application materials so they can more easily determine who is most qualified and act quickly to secure interviews with these candidates," said Max Messmer, chairman of Accountemps and author of Managing Your Career For Dummies.
Although employers may be willing to review longer resumes, job seekers shouldn't go overboard, Messmer noted. "Employers want to see that applicants can prioritize information and concisely convey the depth of their experience," he said.
Accountemps offers the following tips for determining what information to include in a resume:
- Describe key contributions you made at prior roles and how they impacted the bottom line.
- Summarize software expertise and other specialized skills.
- Devote extra space to describing work experience that is most relevant to the job.
- Use terms/keywords referenced in the job description; firms often scan the resume for these words.
- Reference your activities with professional civic associations, community involvement and knowledge of a second language, if they relate to the job opportunity.
- Use exact dates of employment. Months and years are sufficient.
- Include irrelevant details about your personal life or list your hobbies.
- Misrepresent your education or career experience.
- Use professional jargon and abbreviations.
- List references or include a lengthy objective.
- Use complete sentences; short bulleted statements are better.
© 2007 SmartPros Ltd. All rights reserved.
IRS Launches 'Life Cycles' on IRS.gov for Tax Exempts
June 29, 2007 (SmartPros) — The Internal Revenue Service this week launched four new Web-based information tools, called "Life Cycles," to help guide tax-exempt organizations through the federal tax rules and requirements that pertain to them.
The tools, patterned after existing life cycles for public charities and private foundations, provide navigation through the IRS Web site for:
- Social welfare organizations -- under Internal Revenue Code section 501(c)(4).
- Labor organizations -- 501(c)(5).
- Agricultural and horticultural organizations, such as farm bureaus -- 501(c)(5).
- Trade associations and other business leagues -- 501(c)(6).
Each life cycle provides a graphical snapshot of five stages organizations typically go through during their existence: starting the organization; applying for tax-exempt status; filing required returns and other documents; maintaining compliance; and terminating the organization.
"The exempt organizations community has enthusiastically embraced the life cycle concept for public charities and private foundations. We thought it made sense to develop similar helpful tools for other sectors of the exempt organizations community," said Lois G. Lerner, director of the IRS's Exempt Organizations division. "These Web pages are designed to be an easy-to-use service for this community."
Like their predecessors, the new life cycles explain an array of issues, such as how to acquire an employer identification number; how to avoid jeopardizing an organization's exemption; how political campaign involvement could affect the organization's status and tax responsibilities; and how disclosure requirements must be met.
The tools are available at http://www.irs.gov/charities/article/0,,id=169727,00.html
© 2007 SmartPros Ltd. All rights reserved.