Jeffrey M. Rosenblum, P.C.
A Fresh Start

Billions still being lost in tax fraud and identity theft

The Internal Revenue Service has taken a considerable number of steps in the past few years to combat tax fraud and identity theft. Losses due to fraud in 2013 and 2014 totaled nearly $9 billion.

These added precautions will cause a number of refunds for low income families to be delayed this year. The delay impacts those who claimed an Earned Income Tax Credit and/or Additional Child Tax Credit on their taxes. Those refunds won't be issued prior to Feb. 15 of this year.

There has been criticism of this delay because it could impact over 40 million American families who rely on these early refunds to help pay bills and cover basic necessities. However, the IRS says it's necessary in order to help them detect instances of tax fraud. The IRS Commissioner explained recently that the agency is "taking additional steps to protect taxpayers from identity theft, and that sometimes means the real taxpayers face a slight delay in their refunds."

These added security precautions come after a year that started with taxpayers numbering in the tens of thousands reported being victims of identity theft and other types of tax fraud in the first quarter alone. A number of companies reported being targeted by social engineering and Phishing attacks aimed at getting access to employees' W-2 information

Social engineering attacks rely on people within an organization to forgo normal security procedures and provide confidential information to a criminal who poses as an employee. A common scenario reported by victims last year was that someone pretending to be a high-level officer, perhaps even the head of the company, asked an employee to send payroll or tax records to them. The employee complied, not realizing that it was a scam.

It's easy for innocent people to unwittingly get caught up in these scams and then be forced to prove your innocence in court or face serious legal ramifications. With experienced legal guidance, people can show that they were conned into providing confidential information.

Source: CSO, "IRS to delay tax refunds as a security precaution," Steve Ragan, Jan. 23, 2017

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