IRS Warns About Tax Scams Related To Hurricanes, Wildfires and Vegas Shooting

The Internal Revenue Service is warning taxpayers about tax and information-stealing scams that continue to be reported around the country. Phishing, phone scams and identity theft top the list of items normally reported. However, following hurricanes and other disasters, the IRS urged taxpayers to be on the lookout for schemes stemming from these recent events.

“These scams evolve over time and adjust to reflect events in the news, but they all typically are variations on a familiar theme,” said IRS Commissioner John Koskinen. “Recognizing these schemes and taking some simple steps can protect taxpayers against these con artists.”

While individuals and businesses deal with the devastation of Hurricanes Harvey, Irma and Maria and wildland fires in the West, criminals may take advantage of this situation by creating fake charities to get money or personal information from sympathetic taxpayers. They may also attempt to con victims by impersonating a relief agency or charity that will provide relief. Such fraudulent scams and solicitations for donations may involve contact by telephone, social media, e-mail or in person.

Below are some of the more typical scams the IRS has seen:

Email Phishing Scams

The IRS has recently seen email schemes that target tax professionals, payroll professionals and human resources personnel in addition to individual taxpayers.

In email phishing attempts, criminals pose as a person or organization that taxpayers trust and recognize. They may hack an email account and send mass emails under another person’s name. They may pose as a bank, credit card company, tax software provider or government agency. If a person clicks on the link in these emails, it takes them to fake websites created by fraudsters to appear legitimate but contain phony login pages. These criminals hope victims will take the bait and provide money, passwords, Social Security numbers and other information that can lead to identity theft.

Scam emails and websites also can infect computers with malware without the user knowing it. The malware can give the criminal access to the device, enabling them to access sensitive files or track keyboard strokes, exposing logins and other sensitive information.

If a taxpayer receives an unsolicited email that appears to be from either the IRS or a program closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.  Learn more by going to the Report Phishing and Online Scams page.

The IRS generally does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS has information online that can help protect taxpayers from email scams.

Phone Scams

The IRS does not call and leave prerecorded, urgent messages asking for a call back. In this tactic, the victim is told if they do not call back, a warrant will be issued for their arrest.

The IRS recently began sending letters to taxpayers whose overdue federal tax accounts are being assigned to one of four private-sector collection agencies. Because of this, taxpayers should be on the lookout for scammers posing as private collection firms. The IRS-authorized firms will only be calling about a tax debt the person has had – and has been aware of – for years. Taxpayers also would have been previously contacted by the IRS about their tax debt.

How to Know It’s Really the IRS Calling or Knocking on Your Door

The IRS initiates most contacts through regular mail delivered by the United States Postal Service.

However, there are special circumstances in which the IRS will call or come to a home or business, such as when a taxpayer has an overdue tax bill, to secure a delinquent tax return or delinquent employment tax payment, or to tour a business as part of an audit or during criminal investigations.

Even then, taxpayers will usually first receive several letters (called “notices”) from the IRS in the mail. For more information, visit “How to know it’s really the IRS calling or knocking on your door” on IRS.gov.

Tax Refund Fraud -- Identity Theft

Tax-related identity theft occurs when someone uses a stolen Social Security number or Individual Taxpayer Identification Number (ITIN) to file a tax return claiming a fraudulent refund.

In 2015, the IRS joined forces with representatives of the software industry, tax preparation firms, payroll and tax financial product processors and state tax administrators to combat identity-theft refund fraud and protect the nation's taxpayers. This group -- the Security Summit -- has held a series of public awareness campaigns directed at taxpayers called "Taxes.Security.Together."  For tax professionals, the “Protect Your Clients; Protect Yourself” and “Don’t Take the Bait” campaigns encourage the tax community to take steps to protect themselves from identity thieves and cybercriminals.

Security Reminders for Taxpayers

The IRS and its Summit partners remind taxpayers they can do their part to help in this effort. Taxpayers and tax professionals should:

• Always use security software with firewall and anti-virus protections. Make sure the security software is always turned on and can automatically update. Encrypt sensitive files such as tax records stored on computers and devices. Use strong passwords.  

Source: http://www.cpapracticeadvisor.com/

5 Types Of Fraud In Business That Could Put You In A Bind

Running a business is hard enough when everything goes smoothly. But when you’re an entrepreneur, the unexpected happens. You need to prepare yourself for every possible situation, including fraud.

Business fraud isn’t as rare as you might think. It’s important that you know how to prevent and deal with fraud if it comes your way.

Types Of Fraud In Business

Small businesses with less than 100 employees experience a median loss of $154,000 due to fraud, according to the Association of Certified Fraud Examiners (ACFE). This number is higher for small businesses than most large companies.

Employees and customers are just a few people who might take advantage of your small business. Recognize types of fraud in business and learn how to protect yourself.

Here are a few types of common small business fraud you might face.

1. Identity Theft

Identity theft could cost your business thousands of dollars. Fraudsters could steal your business’s identity and use it to access your credit.

People might get their hands on things like financial statements, bank statements, or your federal tax identification numbers. It’s also possible to have information taken from your computer.

To prevent identity theft, make sure you keep your statements and sensitive information secure. If you have physical copies, keep them locked in filing cabinets that only you can access. For digital copies, make sure you use difficult usernames and passwords, and avoid falling for phishing scams. Don’t hand your information out to anyone.

Fraudsters could also have access to your business bank account if employees lose paychecks. Paychecks are very sensitive since they contain your business’s routing and bank account numbers.

If a lost paycheck gets into the wrong hands, fraudsters could access and withdraw money from your bank account. To limit the damage this could do to your business, consider separating your payroll account from the rest of your business’s money.

Having a separate payroll account means potential fraudsters would only have access to a limited amount of funds. You only deposit enough money to cover employee paychecks with a payroll account.

You might also consider paying employees via direct deposit instead of paychecks. With direct deposit, you put the employee’s wages directly into their account. That way, you do not need to pass out checks with sensitive information. Some states allow employers to enforce mandatory direct deposit.

2. Payroll Fraud

Payroll schemes are twice as common in small businesses as opposed to large companies, according to the ACFE. There are a few different ways that payroll fraud can occur at your business.

Employees might ask for pay advances without paying them back. Or, employees might lie about hours worked on their timesheets. Employees could also get co-workers to clock in for them even if they aren’t at work.

Do background checks on all employees before you hire them. And, you should audit payroll accounts so you can catch fraudulent behavior early on.

Use SaaS payroll services so you can approve payroll before you pay employees and keep track of their pay rate and hours within your system. Don’t wait until your business has doled out huge sums of cash to start keeping an eye on things!

3. Money Fraud

Because there’s so much illegal cash circulating in the United States, you might come across fake bills. Money fraud can happen without you or the customer even noticing. But, counterfeit money is worthless when you go to deposit the cash at the bank.

The most common counterfeit bills are high-valued, like $100 bills. If you accept counterfeit money, you won’t receive any revenue from the sale. Worse, you could end up giving real currency as change for a fake bill.

Protect your small business from money fraud by learning how to tell if money is fake. There are different features you should be able to spot on legal currency, like raised printing, microprinting, watermarks, and color-shifting ink. And, teach your employees to check cash before accepting it.

4. Return Fraud

The majority of small businesses that sell goods have experienced return fraud in one way or another.

There are different types of return fraud. Some customers might purchase a product, use it, then return it even though nothing is wrong with it. Or, you might have fraudsters who steal products from you and attempt to return them to make a profit.

Return fraud can be damaging to your business. You might not be able to wipe out all return fraud, but you can limit it based on your policies.

To prevent return fraud, you can require receipts. And, you could tighten your policies so that customers only receive store credit after a certain time period. Although you want customers to be happy, you also don’t want your business to lose money from fraud.

5. Workers’ Compensation Fraud

Workers’ compensation fraud is another type of small business fraud you could come across if you have employees.

As a business owner, most states require that you purchase workers’ compensation. Workers’ compensation insurance pays your employees if they become injured or ill at work.

There are different ways workers’ compensation fraud can occur, so you need to be vigilant. Employees might get injured outside of work and say they got the injury at your business. Or, employees could make up an illness or injury.

How do you protect your business from workers’ compensation fraud? You need to document everything, keep accurate records, and look out for signs of fake injuries.

Author: Mike Kappel

Source: https://www.forbes.com/sites/mikekappel/2017/10/04/5-types-of-fraud-in-business-that-could-put-you-in-a-bind/3/#53b64fc91b60