ID Theft: Phone scammers claiming to be IRS are the hot new thing
That text from the IRS sternly warning that you better pay up or be in really big tax trouble? It’s as bogus as a six-dollar bill.
So are threatening phone calls from people claiming they’re from the IRS, demanding your Social Security number and personal financial information. Or people who call and say they’re from the IRS and need to verify personal information over the phone to process your tax return.
They’re all scams. Indeed, phone scammers have bilked more than $31 million from victims nationwide from October 2013 to April 1 of this year, said Kelly Jackson, special agent in charge of the IRS Criminal Investigation Miami field office.
That equates to more than 5,000 victims across the country. In South Florida, during that same period, thieves duped 274 people out of $1.5 million in phone scams, she said.
“Unfortunately the phone scam has just really taken off. It’s scary for people to get a call demanding money. The IRS does not ask for payment over the phone — that is the biggest PSA [public service announcement] I can make,” said Jackson, noting there is an appeal process for people who dispute the money they owe the federal government.
According to national statistics fromJavelin Strategy & Research, a California-based consulting firm that has been tracking ID fraud for the last 13 years, the total number of victims in 2015 remained steady at 13.1 million, and the total fraud amount dipped slightly to $15 billion. Over the last six years, Javelin estimates that fraudsters have stolen $112 billion – that breaks down to a loss of $35,600 per minute.
Javelin’s recently published 2016 Identity Fraud Study, sponsored in part by LifeLock and MasterCard, found that while the United States switched to chip technology in credit cards — known in the industry as EMV as a nod to its original developers: Europay, Mastercard and Visa — thieves switched their focus from in-person fraud to new account fraud. As a result, that drove a 113 percent increase in new account fraud, which now accounts for 20 percent of all fraud loss, the report showed.
“There are a lot more companies having their data breached. You can buy identities on the dark web; criminals are definitely more sophisticated than the days of stealing a purse out of a car and taking someone’s credit card,” Jackson said.
Over the past three years, the Miami field office of the IRS’ criminal investigation division helped convict approximately 2,000 identity thieves nationwide.
In February, Ronald Jerome Scriven and Danesa Latoya Webb were sentenced to 108 months and 54 months in prison, respectively, in federal court in Fort Lauderdale. Between the two of them, the defendants were ordered to pay nearly $11 million in restitution. According to court records, Scriven had created seven tax preparation businesses, then obtained electronic filing identification numbers (EFINs) from the IRS to electronically submit false tax returns.
In one of South Florida’s most over-the-top ID theft cases, the IRS broke up a six-person ring convicted of stealing 29,000 personal identifications — names, dates of birth and Social Security numbers — to file thousands of fraudulent tax-refund claims totaling tens of millions of dollars. The case, which started after Miramar police investigated a home invasion in the southwest Broward community, led to the convictions of six offenders.
Earlier this month, the ringleader, Harlan Decoste, 27, of Miramar, also known as “Money King,’’ was sentenced to almost 20 years in prison and ordered to repay $28 million to the U.S. Treasury Department. His five codefendants were sentenced to shorter prison terms.
Jackson said the case was one of the largest ID theft-tax refund schemes prosecuted in the country.
Since 2010, Jackson added, the IRS has more than tripled the investigative time devoted to identity theft. From January to November 2015, the IRS stopped 1.4 million identity theft returns, requesting refunds totaling $8 billion.
One of the latest surges in identity theft cases, authorities say, is Stolen Identity Refund Fraud, which federal agents call “SIRF.” Swiping Social Security numbers and dates of birth in order to file false tax returns – and thereby netting stacks of cash from refunds – is not new. However, with the influx of electronic filing websites such as Turbotax.com, identity thieves have upped their speed and productivity. U.S. Attorney Wilfredo Ferrer has said personal identification is “the new crack cocaine” for criminals.
Historically a hotbed of identity thievery, Florida, in 2015, fell behind Missouri and Connecticut in the number of complaints filed, said John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League (NCL). However, Breyault warns, ID theft complaints filed in the Sunshine State in 2015 were higher on a per capita basis —217.4 complaints per 1,200 residents – than 2014 and 2013. Across the country, complaints to the Federal Trade Commission, skyrocketed 47 percent from 2014 to 2015. Last year, the FTC logged more than 490,000 consumer grievances.
Louis Balbirer, a principal in the Fort Lauderdale office of Kaufman Rossin, a Miami accounting firm, said Stolen Identity Refund Tax Fraud (SIRF) tops the list of 2016’s “Dirty Dozen” tax scams. Often, taxpayers don’t even know they’ve been scammed until they try to file a return and are not able to. That happened to one of Balbirer’s clients earlier this year.
“A phone scammer called one of my relatives and told her she owed money to the IRS. She hung up, but a lot of taxpayers don’t,” he said, noting scammers will keep hassling anyone who returns their calls.
One way the IRS has responded to the massive fraud is by sending victims special pin numbers that must be used to file their returns. Without that pin, the IRS won’t accept the documents. The IRS sent out the pins for the 2015 tax season in December and early 2016.
Echoing the FTC, Balbirer’s advice for how taxpayers can better protect themselves includes using a private courier or USPS return receipt requested if mailing physical papers; using encryption software to send financial information; never carrying Social Security cards in your wallets; and checking your credit report at least once a year.
Once you’ve been a victim of identity theft, fully cleaning up your record can take months or longer, said Jackson, with the IRS. It’s a headache for the victim, but the more proactive people are with their financial and digital data, the least likely their data will be breached.
If you have been a victim of identity theft, the FTC encourages you to go online and create a free, recovery plan at IdentityTheft.gov.
Louis Balbirer, MST, CPA, is a Tax Principal at Kaufman Rossin, one of the Top 100 CPA and advisory firms in the U.S.
