Income tax scams hit Twin Lakes Area

As if tax season isn't stressful enough, now scammers are using stolen Social Security numbers of Twin Lakes Area residents to file fraudulent returns in order to receive refund checks from the IRS.

The Baxter County Sheriff's Office has taken reports from at least three area residents who say their Social Security numbers have been used by scammers to file tax returns and receive refund checks.

All three reports were from elderly victims, an all-too-common occurrence, according to Douglas Johnson, a certified public accountant, who serves as the tax department manager for Ballard & Company Ltd. in Mountain Home.

"Unfortunately, when they're contacted by scammers and they hear the words 'IRS,' and then they get threatened with jail, elderly folks get a little jittery," Johnson said. "They start to panic and they give out their information or their credit card number."

Scammers are bold and have access to multiple methods for obtaining sensitive personal information, such as Social Security numbers, from phishing attacks to simply buying numbers stolen by other thieves via the Internet, noted Johnson.

"In Atlanta, the year before last, folks at one house had 1,700 refund checks sent to the same address," he said. "The IRS is behind on this, and in his latest report, the Inspector General was berating them on not stepping up enforcement procedures."

The tactics

Arkansas Attorney General Leslie Rutledge said her office has been contacted by several state residents. Rutledge warns the scammers are smooth.

"These scam artists can sound authentic and be very convincing, as well as demanding," Rutledge said. "But even the most sophisticated con artists will raise red flags alerting consumers to scams. Consumers should always remember that no government entity, including the IRS, will ask for your personal financial information through an unsolicited phone call or e-mail."

Clay Sanford, IRS spokesman for the state of Arkansas, concurred with Rutledge's assessment and added scammers are becoming more adept.

"We've seen a lot of telephone scams this year, and also phishing scams," Sanford said. "Not only are these scams still out there, they're getting more sophisticated, which makes them more dangerous."

Sanford said scammers are now manipulating or "spoofing" what citizens see on their caller ID devices.

"When they call a potential victim, the scammer can actually make a victim's caller ID display that the call is from the IRS," Sanford said. "They'll threaten to have the person arrested, have their driver's license suspended, unless the person divulges personal financial information."

And, if the victim hangs up without giving the scammers what they want, some scammers have gone an extra step with caller ID spoofing.

"If a potential victim hangs up, some of these scammers are so aggressive, that doesn't stop them," Sanford said. "They'll actually call back and the caller ID for the second call will be from the victim's local sheriff's department."

The red flags

Authorities agree there are red flags that should alert citizens they may be targets of scammers.

"We at the IRS do not make first contact with a taxpayer by phone or by email," Sanford said. "We will send a letter, and it will often include a phone number for them to contact us at."

Johnson agrees, and says in his years as a CPA, another simple red flag marks a situation as an obvious scam attempt.

"If your tax return has a simple anomaly, say a large charitable contribution, you'll get a letter," Johnson used as an example. "You'll have to provide a receipt, maybe some other minor documentation. The process for a single anomaly usually takes about 90 to 120 days to clear up. Scammers want you to do something right now."

It also is emphasized that any request for personal financial information over the phone or via email is likely to be a scam. The IRS does not make such requests, nor do most businesses.

"You shouldn't give out personal financial information over the phone unless you initiate the call," Johnson said. "You want to be very careful and very protective of your personal information."

If you are suspicious about a phone call, ask to speak to the person's supervisor, authorities suggest. Additionally, you can always hang up, look the phone number up yourself, call back and ask to speak to the person you've just had a phone conversation with.

Someone tried to scam you?

If someone tries to scam you by impersonating an IRS official, the agency wants to know about it. Sanford asked that anyone who encounters an attempted scam to contact the IRS at (800) 829-0433. For the Arkansas Attorney General's consumer protection division, call (800) 482-8982.

Those wishing to talk to a local voice are encouraged to start with their local law enforcement agency.

"You can always contact your local sheriff's department or police department," Johnson said. "It won't be their first rodeo in dealing with things like this and they can help you or point you in the right direction."

IRS "Dirty Dozen" tax scams for 2015

Phone Scams

Aggressive and threatening phone calls by criminals impersonating IRS agents remains an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent months as scam artists threaten police arrest, deportation, license revocation and other things.

Phishing

Be on guard against fake emails or websites looking to steal personal information. The IRS will not send you an email about a bill or refund out of the blue. Taxpayers should be wary of clicking on strange emails and websites. They may be scams to steal your personal information.

Identity Theft

Watch out for identity theft, especially around tax time. The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else's Social Security number.

Return Preparer Fraud

Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. But there are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams. About 60 percent of taxpayers use tax professionals to prepare their returns.

Offshore Tax Avoidance

The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows it's a bad bet to hide money and income offshore. The IRS offers the Offshore Voluntary Disclosure Program (OVDP) to help people get their taxes in order.

Inflated Refund Claims

Be on the lookout for anyone promising inflated refunds. Taxpayers should be wary of anyone who asks them to sign a blank return, promise a big refund before looking at their records, or charge fees based on a percentage of the refund. Scam artists use flyers, advertisements, phony store fronts and word of mouth via community groups and churches in seeking victims.

Fake Charities

Be on guard against groups masquerading as charitable organizations to attract donations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. Be wary of charities with names that are similar to familiar or nationally known organizations.

Hiding Income with Fake Documents

Hiding taxable income by filing false Form 1099s, or other fake documents, is a scam taxpayers should always avoid and guard against. The mere suggestion of falsifying documents to reduce tax bills or inflate tax refunds is a huge red flag when using a paid tax return preparer. Taxpayers are legally responsible for what is on their returns regardless of who prepares the returns.

Abusive Tax Shelters

Avoid using abusive tax structures to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. Everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, seek an independent opinion regarding complex products being offered.

Falsifying Income to Claim Credits

Avoid inventing income to erroneously claim tax credits. Taxpayers are sometimes talked into doing this by scam artists. Remember, you are legally responsible for what is on your return.

Excessive Claims for Fuel Tax Credits

Avoid improper claims for fuel tax credits. The fuel tax credit is generally limited to off-highway business use, including use in farming. The IRS routinely finds unscrupulous preparers who have enticed sizable groups of taxpayers to erroneously claim the credit to inflate their refunds.

Frivolous Tax Arguments

Be cautious of using frivolous tax arguments to avoid paying taxes. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims to avoid paying the taxes they owe. These arguments are wrong and have been thrown out of court. While taxpayers have the right to contest their tax liability in court, no one has the right to disobey the law or disregard their responsibility to pay taxes. The penalty for filing a frivolous tax return is $5,000.