Monday, March 5, 2018

New York State Tracks Schemes Affecting Taxpayers and Preparers

The New York State Department of Taxation and Finance and the New York Department of State’s Division of Consumer Protection today alerted taxpayers and tax professionals to scammers who aim to steal sensitive information and hard-earned refunds.

“We’ve made tremendous strides in our ability to uncover and deter tax fraud even as it continues to proliferate,” said Acting Tax Commissioner Nonie Manion. “Scammers continually adjust their tactics to circumvent the defenses in place, though, so we must all remain vigilant.”

“Unfortunately, nefarious actors seek to take advantage of unsuspecting individuals during the annual tax filing process—especially in the wake of significant data breaches,” said New York Secretary of State Rossana Rosado. “However, by taking action to protect and educate themselves, taxpayers will be able to spot a scam a mile away and protect their identities and refunds.”

Stay on Top of Emerging Scams

In the wake of recent personal information breaches, including the massive Equifax breach where hundreds of millions of identities were exposed, New York State has taken specific action to prevent the fraudulent use of taxpayers’ personal information by nefarious preparers to file bogus refund claims.

By integrating predictive analytics into its processing, auditing, and collections systems, the Tax Department is better able to flag these refund claims and other suspicious tax filings for greater scrutiny. Teams dedicated to uncovering tax fraud and identity-theft schemes bolster this effort.

Since 2003, the Tax Department has used its evolving Case Identification and Selection System to pull questionable tax returns and fraudulent refund claims from the processing flow. The system uses predictive analytics to determine when to process a refund request and when to set it aside for further review.

However, as technology continues to advance, cyber thieves and scammers turn to more sophisticated methods in their attempts to steal personal information and defraud hardworking New Yorkers. That’s why the Tax Department and Division of Consumer Protection track such schemes around the country to prepare for the use of these or similar tactics in New York and take steps to educate the public.

In one new scheme, a fraudster uses stolen information to file a return and claim a refund, which is deposited into the victim’s actual bank account. This is followed by a call to the taxpayer from the scam artist posing as an official from a debt-collection agency. The scammer says the money was deposited in error, must be returned, and instructs the victim on how to forward the money.

Protect Against Fraud

The Tax Department and the IRS will never make threats over the phone and will never request personal or financial information by email.

“If you receive a phone call or email from someone about your tax return, a refund, or a possible debt you may owe, and aren’t sure if it’s legitimate, call us,” Manion said. “We’ll be able to verify the call or email.”

Tax professionals are required to protect their clients’ personal information by only providing it to trusted sources, such as the IRS and the Tax Department. In addition, they must securely shred documents that contain private data before discarding.

For more about tax professional standards, please visit our Professional responsibility webpage.

Report It

If you’ve been contacted by a scammer posing as an IRS agent, visit the IRS identity theft victim assistance webpage.

If you’ve been contacted by a con artist claiming to be from the New York State Tax Department, visit the Tax Department’s Report fraud, scams, and identity theft webpage.

If you suspect a return preparer filed or altered a return without your consent, report it to the NYS Office of Taxpayer Rights Advocate at 518-530-HELP (option #2) or file a tax preparer complaint online.

Additional Taxpayer Actions

Take precautions to protect your refund and prevent identity theft with the following tips:

File promptly. Prompt filing can limit an identity thief’s ability to claim a fraudulent tax refund using stolen information.

Beware of scam artists fraudulently posing as tax preparers. Scammers will often attempt to take advantage of those who might not otherwise have to file tax returns, such as the elderly or low-income households.

Work only with paid tax preparers you have researched thoroughly and trust. Avoid preparers who claim they can obtain larger refunds than other preparers, as well as those who base their fee on a percentage of your refund.

Make sure your tax preparer is willing to sign your return and provide their IRS Preparer Tax Identification Number (PTIN). The preparer must also provide you with a copy of the return.

Look over your return carefully. You are responsible for what’s on it. Similarly, if you hire a paid preparer, never sign a blank return.

For more information regarding scam prevention and consumer education, contact the Division of Consumer Protection Helpline at (518) 474-8583 or 800-697-1220.

Source: The New York State Department of Taxation and Finance

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