Tag: Social Security Number

How to avoid tax season scams

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This is an expanded version of a post I wrote last year. It’s a hot topic every winter/spring, so I thought it might be a good time to revisit.

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I’m going to amend an old saying right now: in this world nothing can be said to be certain, except death, taxes and tax season scams.

It happens every single year now, from January through April: tax-related scams absolutely run riot, from emails and phone calls to shady tax preparers and rogue employees.

There are some easy ways to keep yourself safe, though.

The IRS Will Not Email You

There is no scenario in which the IRS is going to send you an email. Even if you used online tax software to e-file your return, they are never going to contact you in this way if there’s a problem with your filing. They will contact you via telephone or, in most cases, use postal mail.

This is a vitally important point to remember. Do you know what the #1 email scam was in 2009? It was phishing emails designed to look like they came from the IRS. If you get one, forward it to phishing@irs.gov and help them fight these scams, and never open attachments in an unexpected email unless you want to be infected with spyware or to allow a criminal to access and control your computer.

The IRS Will Not Ask You to Verify Information

Even if there is a problem with your return, or you’ve been selected for an audit, the IRS is not going to ask you to “verify” your personal information. This goes for any mode of communication, electronic or otherwise.

Here’s the deal: they’re the IRS. They don’t need to ask you for your personal information. They already know who you are, when you were born and what your Social Security Number is.

Don’t Trust Caller ID

I’ve never even heard of anyone getting a phone call from the IRS, but my sources say it does happen. However, the time when you could implicitly trust caller ID is long gone. It’s easy to spoof a caller ID display using Voice Over Internet Protocol (VoIP).

If the caller ID says Internal Revenue Service, but they’re asking you to verify your personal information, bank account or credit card numbers, you’re dealing with a scam. Hang up immediately.

The IRS Keeps Pretty Normal Business Hours

In addition to being wary of caller ID, also know that the IRS isn’t going to call you on the telephone in the middle of the night.

This same rule goes for callers that claim to represent your banking institution. How many times have you seen a bank open at 3 AM? Not often. Phone calls at strange times are a sure sign of a scam.

Know Your Tax Preparer

If you’re paying someone else to prepare your tax return, only deal with people or businesses you know and trust. If it’s a friend or relative, make sure they know what they’re doing. It doesn’t matter who prepared your return—you are ultimately responsible for the filing.

Personally, I think it’s best to have a person you always go to. A couple years ago there was a case in Northwest Indiana where dozens of people had their identities stolen by some rogue employees of a national tax preparation company. If you’re not doing your own taxes at home, I recommend using a CPA you know personally (or can get to know over time).

Be Wary of Big Promises

When you’re shopping for a tax prep person or agency, be cautious of anyone making wild claims about the money they can get for you. Remember: you’re the one whose name and signature go on that tax return. If they put some giant fabrication on that form, and you sign it, that means you agreed it was accurate. You’ll be the one in trouble when you’re found out.

A fictional story about a guy who did everything wrong one day

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Hi there.

My name is Johnny, and I had a busy day today.

I woke up around eight because I had a new job as a secret shopper. I got an email a couple weeks ago, and they hired me on the spot when I responded. Yesterday, an envelope arrived with a check and my first assignment.

I headed to my bank around nine. At first, the teller didn’t want to cash the check because I only had six bucks in my account, but I whined and got in her face and demanded to talk to the manager until she relented. “That’s a cashier’s check,” I told her in no uncertain terms. “Those are the same as cash.”

I left the bank with $2,700 in my pocket and headed to the nearest Western Union location. The guy there kept asking me questions about the money I was wiring, so I finally told him it was for a relative in Canada, just like the secret shopping company told me to do. It was a little annoying the way he wouldn’t leave me alone. I’m going to put that in my report for sure.

By the time I was done, it was only ten o’clock. I had made $150 for less than an hour of work! I could get used to this lifestyle. I decided to head home.

The phone was ringing when I came in the door. I ran to answer, and this guy from the county courthouse was telling me I was going to be arrested for not appearing for jury duty.

“But I never got a letter that said anything about jury duty,” I said.

“That doesn’t matter,” he replied. “The fact is that you didn’t show, and an officer will be stopping by later today to make the arrest.”

“But…isn’t there some way I could just do jury duty another time? I didn’t miss on purpose.”

“Let me see what I can do, sir,” the man said. After a minute on hold, he told me I could just pay a fine and the whole thing would be taken care of. I gave him my name, date of birth, Social Security number and some credit card information to pay the fine. I was relieved when I hung up the phone. Crisis averted.

The mail had arrived, but it was nothing but a pile of credit card offers. I threw these in the trash unopened. Nobody’s going to rip me off.

I sat down on the sofa to unwind with some TV. It was mostly talk shows at that time of morning, but there was a news broadcast between commercials that caught my eye. It gave some phone number you could call to get your debts eliminated. I have a lot of debt, so I wrote down the number. It seemed like a strange place for a news alert, during the commercials, but whatever. There was a ticker on the screen and some footage of the President, so it must be some kind government program, right?

I went to the computer to write up my report for the secret shopping job. I hate my computer. It came with this virus protection software, but the only thing it’s done for the past two years is tell me my subscription is expired. It’s annoying. Plus, when I opened my web browser (Internet Explorer 6) and tried to visit a website, this window popped up offering a free virus scan. I clicked “OK” and it found like ten infections. The software that came with my computer doesn’t even work!

After the scan, there was a window that wouldn’t go away, so I just closed the browser and checked my email. There, a miracle happened. It turns out I was entered in the lottery up in Canada, and I won! $2,500,000, all for me. I called the claims agent right away. It turns out there are some taxes and fees I have to pay first, but that’s okay—they’re going to mail me a check. I think I may retire from secret shopping. After all, with two-and-a-half million, I’m going to be pretty much set for life.

I’m not going to tell anyone about it, though. I don’t want everybody asking me for money.

My name is Johnny, and I made at least ten mistakes today, if not more. Can you spot them all?

Child Identity Theft: How shady credit repair companies are stealing kids’ Social Security Numbers

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Shady, fly-by-night credit repair companies that promise fast credit score improvements (700-800 in just a couple months!) may be sinking to a new low here. It seems they’re harvesting valid but inactive Social Security numbers, many from children too young to have opened financial accounts.

They sell the numbers as “CPNs,” or “Credit Profile Numbers” (sometimes the “P” is “privacy” or “protection”). They tell their customers how to piggyback their credit on the clean CPN, which has the effect of making them appear more creditworthy. Once they burn through the credit for that number, they just purchase another one (I wonder if they use a credit card).

There are several articles on the topic all over the Internet. The Sun News out of South Carolina has a good one that explains it very well. However, there are still a few questions I have about this crime:

  1. Am I to understand that simply calling it a “CPN” instead of a Social Security Number somehow makes this practice legal?
  2. How are they obtaining the SSNs of all these children? Are they using a logarithim to generate the numbers, or is your Social publicly available until you turn 18?
  3. If it is, do I have to personally go to Washington D.C. and rap my knuckles on every single noggin in Congress (and yell “Helloooo, McFly, anybody home?!” in every single ear) until this is remedied with Federal intervention?

In any case, it’s time to check your kids’ credit reports. Yes, today. You don’t want to wait until they get turned down for an auto loan fifteen years later for allegedly defaulting on $45,000 worth of credit card debt.

This has been a pretty big story in the fraud prevention world. Look for more information to surface over the next few weeks.

How to avoid employment identity theft.

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I’ve said many times before that not all identity theft is strictly financial, although other types of theft may have financial implications.

Medical identity theft is used to obtain services or to bilk insurance companies out of money for services that were never given. It can lead to collections activity against the victim, and at worse, false medical records that could be hazardous to the victim’s life.

Criminal identity theft can lead to victims being incarcerated and stuck with false arrest records that are difficult to expunge. It can lead to loss of job opportunities, and in some cases the victim has to hire a criminal defense attorney to get the situation under control.

Employment identity theft can, on the surface, seem like an almost victimless crime. When someone simply uses your personal information to obtain a job, you might not necessarily even find out unless you happen to apply for a position with the same employer (which has happened before). In fact, I’m sure that a lot of the people who actually use stolen information to get jobs think of it as a victimless crime.

However, what happens if the person using your identity to get a job doesn’t pay taxes on their earnings? The IRS will come looking for you.

One of the enduring myths of identity theft is that the person who steals your information is going to be the same person who uses it. This used to be more or less true, in the days before the Internet made things easier for criminals. These days, a more likely scenario for employment identity theft is that one entity steals information from a lot of different people, then sells it to those who need it. As I’ve often said, this is the realm of organized crime. The person who snags your Social Security Number through illicit means is just a middleman.

In other words, the standard rules apply; guard your SSN and be cautious about who you give it to.

Fraudulent job listings are a major source for this form of “retail” identity theft. You have to be extremely careful when applying for jobs online, especially during these times of high unemployment. However, don’t let your guard down when the economy recovers. This stuff is always out there.

First, never give your Social Security Number before a job interview. Any employer talking about a “preliminary background check” is already breaking the law, so you know right away that something is wrong. The second they speak of a preliminary check, refuse and move on.

Second, never provide financial information. If it’s a job that requires a credit check before hiring, they don’t need account numbers for that. They’ll need your Social Security Number, but by the time you’re actually sitting in an office with an interviewer, surrounded by employees, you’re a little safer in giving them the information. Thieves don’t often set up actual office premises—it’s too much work.

Third, be extremely vigilant when applying for jobs online. Do your homework, check up on the company, make sure any emails are from company accounts (like [nameofcompany].[com/org/net]), not free personal addresses (live.com, gmail.com, yahoo.com, etc.). Online application forms are an easy way for fraudulent web sites to harvest personal information. If they’re asking for your Social Security Number, STOP.

Finally, these are far more “work at home” scams on the Internet (and in the Classifieds, in your Inbox and stapled to telephone poles) than there are legitimate home-based job opportunities—the ratio is 54-to-1, according to one source. This means that if you’re looking at an online work-at-home offer, there is a 98% chance that it’s a scam and possibly a front for an identity theft ring. In other words, don’t even bother.

If you’re serious about working from home, your best bet is to contact a staffing agency (preferably a local one with an actual, physical office) and see if they have any leads. Or, you can start your own business and create your own income model. You either have to telecommute (traditional job, only you don’t go to the office much) or create something that people want (whether a product, information, or entertainment content) on your own, and figure out how to monetize it.

When do you have to give your Social Security Number?

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You hear a lot of information about when not to give out your Social Security number, but when are you required to reveal it?

The short (and incomplete) answer is: any time you’re doing something that involves taxable income.

A little more specifically, you’re probably going to be required to provide your SSN in the following situations:

  • Opening a new account at a financial institution
  • Taxes
  • When you get a new job
  • When obtaining or renewing your driver’s license or other state-issued identification
  • Conducting business involving government welfare or healthcare (Medicare, for example)

Aside from those situations, be very cautious about sharing your number. Actually, be very cautious anyway, but in other situations you would be wise to ask:

  • Why your number is needed
  • How your number will be used
  • What happens if you refuse
  • What law requires you to give your number

Finally, be extremely cautious (read: don’t do it at all) when it comes to people asking for your Social over the telephone or Internet, especially if they initiated the contact with you. If you can’t verify who the requesting entity is (as well as the answers to the four questions above), refuse to share your number.