This blog series is dedicated to sharing real-world stories of identity fraud and theft — and just how devastating these crimes can be on organizations, individuals, and families. Our latest post focuses on how the tax-filing-date extension related to the COVID-19 financial crisis has led to a new round of schemes to steal federal stimulus payment checks.
Real Identity Theft Stories | Case #17 Stimulus Check Fraud
Many taxpayers devasted by COVID-19 were relieved when the Internal Revenue Service (IRS) extended the 2019 filing deadline to July 15 and the U.S. Treasury announced that it was expediting payment of $1,200 Economic Impact Payments to qualifying filers (plus $500 per qualifying child).
But beware: A group of cyberthieves has sprung into action with a new twist on stealing personal information and COVID-related federal relief money. In one recent case, a Chicago couple, Jim and Dawn Ackerman, never received their expected check because someone stole Jim’s identity and used it to claim dependent or spousal benefits in a fraudulent tax return, a form of tax identity theft. When Jim attempted to file his 2019 taxes, he discovered that a thief had already used his Social Security number (SSN) to divert his stimulus check to a potentially untraceable bank account.
With Jim out of work and with little savings, the Ackermans’ frustrations were compounded when they discovered that, due to the national shutdown, the IRS currently has no telephone support available. Their complaint has been filed, but there is no certainty when their issue will be resolved, as mail processing functions have also been scaled back. Meanwhile, as she waits for the IRS to investigate their case, Dawn fears the couple may not see their issue resolved until the end of the year. She doubts their creditors will be sympathetic.
It turns out that the three-month tax-filing extension may be opening a new can of worms for many Americans. As we noted in another recent post about tax identity theft during the coronavirus pandemic, there has been an uptick in a number of identity theft cases tied to stolen tax refunds, especially now that identity thieves enjoy the same 90-day extension. The situation may be even worse for those who, as a result of higher incomes or under-withholding, don’t expect to receive a refund or stimulus check in the first place.
The deadline for filing taxes has been extended to July 15, but the longer you put off filing, the greater the risk of a fraudster using your stolen SSN to claim stimulus benefits or a tax refund. We recommend that you file your 2019 federal (and state) taxes as soon as you feasibly can.
Coronavirus: A growing contagion for tax filers
According to the U.S. Federal Trade Commission (FTC), more than 1,800 consumers have filed a complaint with the IRS about identity fraud related to the U.S. government’s coronavirus response efforts. (Sixty-nine were reported in Illinois alone, which suggests a “hot spot” of criminality.) At the time of this posting, there have been more than 48,000 overall reports of coronavirus-related fraud to the FTC, totaling more than $35 million in financial losses, including identity theft.
In a similar scheme to the one that befell the Ackermans, scammers are using the efficiency of the government’s COVID-related outreach — all stimulus checks are being distributed with no action required for most people — to cheat taxpayers out of their money. Some are making fake IRS calls asking for bank account information in order to deliver stimulus checks via electronic delivery (the IRS never makes calls of this type, and for electronic filers who have received refunds or paid taxes electronically in 2018 or 2019, the agency already has this information on file and will send funds by direct deposit or in the mail).
The FTC has issued detailed guidelines on how to protect your valuable Personally Identifiable Information (PII) from these types of calls, as well as fake emails, texts, and phishing scams. (PII includes bank and credit card account numbers, SSNs, and login IDs and passwords.) To this list, we would add a few other recommendations:
- Never divulge critical company or personal information over the phone. Be suspicious of unknown callers, someone you don’t know well, or a phone number you don’t recognize. Hang up on robocalls.
- The IRS will not call you regarding your Economic Impact Payment (EIP). Your stimulus check will either be deposited directly to your bank via information that the IRS already has about you, or it will send you a check in the mail. In either case, you should have already received (or expect to receive) a physical letter from the U.S. Treasury confirming that an EIP payment is being made, and how it will be delivered to you.
- Working from home (WFH). With most companies and employees working remotely, organizations are challenged more than ever to keep data secure from proprietary databases, high-volume data platforms, and third-party service providers. According to the Internet Theft Resource Center, the risk of COVID-19-related data breaches likely will continue to increase, as identity thieves probe less secure remote networks. Make sure your company and home-based security software is kept up to date, and that your company has policies, processes, and employee training programs in place to protect valuable customer and employee information.
Criminals are never in lockdown. Get in touch with us for proactive protection to safeguard yourself and your business from being victimized by coronavirus-related scams or tax identity theft. We can help you take the steps to protect what matters most.
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