Employers beware.
Scammers are out to steal your employee data through identity theft and fraudulent tax refund schemes. Last year 100 California businesses employing 126,000 workers were hit, and 80 companies have already been targeted in the first few weeks of this tax filing season, according to the state Franchise Tax Board (FTB).
Tax season runs from January to tax day, which this year falls on April 18.
Many scams are done via email
“Most of the examples we’ve seen are emails that ask employers for some type of identity information on their employees,” FTB spokesman Jacob Roper said. “They look very much like the emails they’d normally get from their HR department. They wouldn’t know the difference unless they looked at it with a critical eye.”
When criminals manage to successfully steal a company’s information they often file a fraudulent tax return in an attempt to claim and redirect a taxpayer’s refund. But it doesn’t necessarily happen right away.
“One thing we’ve seen is that a lot of these ID thieves don’t use the information immediately,” Roper said. “They will sometimes wait a year or two until the victim’s guard is down. But if anyone suspects that something is going on we would encourage them to contact us immediately.”
The FTB cautions California employers and residents to be suspicious of anyone who contacts them by email, mail or phone asking for passwords for credit cards, bank accounts, bank debit cards, email accounts or other private information.
Some will threaten arrest if a debt isn’t paid
Scammers will often ratchet up the pressure by threatening to contact local police or other law enforcement agencies to have someone arrested if a debt isn’t paid. Businesses and consumers should likewise be leery if an official looking communication from the FTB demands payment by third-party issued or pre-paid debit cards. The agency doesn’t accept those forms of payment.
Phishing emails, the FTB said, often ask for Social Security numbers, users names and passwords or credit card and bank information.
IRS warns of bogus tax preparers
The Internal Revenue Service just released its “Dirty Dozen” List of Tax Scams for 2017. The agency warns that some bogus tax preparers set up shop each filing season to orchestrate refund fraud, identity theft and other scams that hurt taxpayers and businesses.
IRS Criminal Investigation works closely with the Department of Justice to shut down scams and prosecute the criminals behind them. Taxpayers should keep in mind that they are legally responsible for what is on their tax return even if it is prepared by someone else.
One scheme originated in Hacienda Heights
Roper said the FTB can’t release specific information on the 80 California companies that have been targeted by scammers this year because of privacy concerns. But the U.S. Department of Justice highlighted a case last year that occurred in the San Gabriel Valley.
The DOJ noted in June of 2016 that Heber Cotton, 40, of Hacienda Heights was sentenced to 30 months in federal prison for his role in a scheme that used stolen identities to file fraudulent tax returns with the IRS. Cotton had been looking to collect more than $2.6 million in bogus tax refunds.
Cotton’s father and co-defendant, Adel Cotton, 64, also of Hacienda Heights, is currently serving a prison term of 51 months for his role in the scam.
“This father and son pair prolifically defrauded the government and hundreds of taxpayers, earning them the significant sentences imposed by the court,” U.S. Attorney Eileen M. Decker, chief federal law enforcement officer in the Central District of California, said in a statement.
Feel you’re being scammed? Here’s where you can report it
Taxpayers are encouraged to report tax scams and identity theft schemes to the FTB as soon as possible, either online or by calling FTB at 800-852-5711. Businesses that are concerned about their employees’ information should contact FTB at 916-845-7088 and select option 5.
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