Tax refund fraud and identity theft become high ... - Gunster Law Firm

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IRS Commissioner Shulman warns that the ?unprecedented effort against identity theft sends a strong, unmistakable message to anyone considering participating in a refund fraud scheme this tax season . . . we are aggressively pursuing cases across the nation with the Justice Department, and people will be going to jail.?

With tax season on its way, taxpayers must educate themselves about identity theft. This type of theft usually takes place early in the tax filing season when thieves file tax returns with stolen social security numbers and obtain refunds. The IRS and the Department of Justice took action on this issue just last month, bringing enforcement actions in various locations in Florida which included Miami, Ft. lauderdale, Port St. Lucie, Ocala, Tallahassee, Fort Myers, and Pensacola. As a result, in Miami, owners of a check cashing store were charged with conspiracy in connection with an IRS tax refund check cashing scheme; in Pensacola, five were indicted for a fraudulent prisoner income tax refund scheme; and in Tallahassee, nine defendants were indicted in a tax refund scheme.

What is identity theft?

Identity theft occurs when someone uses another?s personal information without permission to commit fraud or other crimes using the victim?s name, social security number or other identifying information. Usually these types of thieves use a legitimate taxpayer?s identity to fraudulently file a tax return and claim a refund. However, as a taxpayer you may not realize that you are a victim until you receive a letter from IRS stating that more than one tax return was filed with your information, that you have a balance due, or that IRS records show wages from an employer that you have never worked for!

How does a legitimate taxpayer reduce the risk of identity theft?

First, you should know that the IRS does NOT initiate contact with taxpayers by email to request personal or financial information. This means that the IRS will not attempt to initiate contact with a taxpayer using text messages and social media channels. A taxpayer can report suspicious emails to phishing@irs.gov or by phone at 1-800-366-4484.

Next, you should follow these tips, which are recommended by the IRS to reduce your risk:

• Don?t carry your Social Security card or any document(s) with your SSN on it.
• Don?t give a business your SSN just because they ask. Give it only when required.
• Protect your financial information.
• Check your credit report every 12 months.
• Secure personal information in your home.
• Protect your personal computers by using firewalls, anti-spam/virus software, update
  security patches, and change passwords for internet accounts.
• Don?t give personal information over the phone, through the mail or on the Internet unless
  you have initiated the contact or you are sure you know who you are dealing with.

Also, Department of Justice attorneys have cautioned that people often make the mistake of providing their SSNs to doctor?s offices and other medical facilities. Providing this type of information is not necessarily required and can increase a person?s risk of identity theft.

Carefully select a reputable professional to submit your return

Recently, a tax preparer was sentenced to 18 months in prison and ordered to pay $784,000 in restitution for filing fraudulent tax returns, identity theft and unauthorized use of another person?s Social Security number. The return preparer conducted a fraudulent tax filing scheme in which false employer earnings statements were submitted in support of tax returns for various individuals, some of whom were unaware that their personal information was being used to file and obtain tax refunds. The preparer?s scheme generated several hundred thousand of dollars of fraudulent refunds and was discovered after the preparer?s employer conducted an audit, noticed suspicious transactions and reported them to the IRS.

What does a taxpayer who is a victim of identity theft need to do?

If you do receive a notice from the IRS, open the letter. Interestingly, many people who receive mail from the IRS do not open these letters because they are immediately struck by panic and fear. Next, you need to respond immediately to the name and number provided in the IRS letter. You may also need to complete Form 14039, IRS Identity Theft Affidavit. There is also a special IRS unit, the IRS Identity Protection Specialized unit that a taxpayer can contact at 1-800-908-4490.

If you have any questions on the material in this newsletter, please contact:

Lu-Ann Dominguez
954.468.1393 ? ldominguez@gunster.com

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Tax Advice Disclosure: To ensure compliance with requirements imposed by the IRS under Circular 230, we inform you that any U.S. federal tax advice contained in this communication (including any attachments), unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any matters addressed.

This publication is for general information only.It is not legal advice, and legal counsel should be contacted before any action is taken which might be influenced by this publication. Established in 1925, Gunster Yoakley is one of Florida?s oldest and largest full-service law firms. Its substantial and diversified practice serves an extensive client base of international, national and local businesses, institutions, local governments and prominent individuals. The firm maintains a strong presence in Florida with offices in Fort Lauderdale, Miami, Palm Beach, Stuart, Vero Beach, West Palm Beach, Jacksonville, Tallahassee, and Tampa. Gunster Yoakley is home to more than 180 attorneys and 329 employees, providing counsel to clients through 18 practice groups including corporate, immigration, employment, technology and emerging companies, tax, banking and financial services, real estate, land use and environmental, business litigation, and private wealth services.

Tags: Lu-Ann M. Dominguez

Source: http://www.gunster.com/newsletters-and-alerts/tax-refund-fraud-and-identity-theft-become-high-priorities-as-tax-season-approaches/

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