Internal Revenue Service Alerts Tax Payers On Identity Theft And Phishing Scams

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Recently, the Internal Revenue Service (IRS) alerted users on various tax scams. Identity theft and phishing rank second in the annual list of 'dirty dozen' tax scams for 2011 released by IRS. Hiding income in offshore accounts tops the list of the scams. Other tax scams include return preparer fraud, false claims, frivolous arguments, non-taxable social security benefits with exaggerated withholding credit, abuse of charitable institutions, abusive retirement plans, disguised corporate ownership, zero wages, misuse of trusts and fuel-tax credit scam.

Scammers are leveraging the cyberspace to defraud tax payers. Cybercriminals steal names, addresses, social security numbers, account numbers, credit and debit card information through intrusion, misrepresenting, unauthorized access or social engineering. The stolen information is used to conduct fraudulent credit card transactions and steal funds from user accounts. The stolen information could also be used by fraudsters to impersonate a legitimate tax payer. They may submit fraudulent tax return and claim refunds on behalf of the legitimate tax payer.

Phishing ...
... is one of the common methods used to extract highly confidential personal and financial information from tax payers. They send cleverly crafted e-mails, which purportedly appear to come from IRS and other government authorities in United States (U.S). The e-mails lure the recipients that they are eligible for tax refunds. Some e-mails may also contain the amount of eligible refund to assure the recipients that the e-mails are from a legitimate source. The e-mails may then ask the taxpayer to click on a link to fill a tax refund form. Unwary individuals, who click on the link, are redirected to a fake site identical to IRS, wherein they are asked to enter personal and financial information.

Growing use of cyber space to perpetuate crime has forced governments to create separate wings for cybercrime investigation. This has led to increased demand for IT professionals qualified in programs such as IT masters degree and computer forensics.

Tax payers in other countries also suffer similar phishing and identity theft attempts by fraudsters. Recently, tax payers in United Kingdom (U.K) received phishing e-mails, which lured users through unclaimed tax refund notification. The scam e-mail promises tax refunds of specific amounts, if recipients respond in within a stated period. When recipients click on a link, they are redirected to a fake webpage of HM Revenue and Customs. Unwary users who visit the page are asked to click on a logo of one of the several banks listed to reveal confidential information. As both individual and corporate tax payers are targeted by offenders, employees must be guided on safe online computing practices through training sessions, e-learning and online technology degree programs.

Online tutorials, blogs, security advisories and online computer degree programs may be used to educate tax payers on different types of scams and precautionary measures to be undertaken. Individuals must regularly update anti-virus solutions, enable phishing filters and site advisories. They must desist from downloading e-mail attachments from unreliable sources as that may result in installation of malware and spyware in their computers. They must avoid clicking on suspicious links, and report suspicious e-mails to the concerned counter crime and regulatory authorities.