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IRS uncorks Dirty Dozen Tax Scams for 2013

Identity theft, phishing, fraud are rampant, IRS warns

By , Network World
March 26, 2013 12:07 PM ET

Network World - The Internal Revenue Service today reminded taxpayers that there are plenty of scam artists and cybercriminals that want your money.

The tax collection agency issued its "Dirty Dozen" list of tax scams that it says peak at this time of year and include:

Identity theft

Tax fraud through the use of identity theft tops this year's Dirty Dozen list. Identity theft occurs when someone uses personal information such as your name, Social Security number (SSN) or other identifying information, without your permission, to commit fraud or other crimes. In many cases, an identity thief uses a legitimate taxpayer's identity to fraudulently file a tax return and claim a refund, the IRS said.

[ MORE: FTC: Identity theft retains its throne as No. 1 worst scourge in Top 10 consumer complaint list 

RELATED: IRS: Top 10 things every taxpayer should know about identity theft ]

The IRS is trying to battle the rising tide of identity theft and in January completed what it called a massive national sweep targeting 389 suspects in 32 states and Puerto Rico. The IRS Criminal Investigation unit the total number of identity theft investigations to more than 1,460 since the start of the federal 2012 fiscal year on Oct. 1, 2011. The identity theft fight reflects a wider effort underway at the IRS. Among the highlights:

  • The number of IRS criminal investigations into identity theft issues more than tripled in fiscal year 2012. The IRS started 276 investigations in fiscal year 2011, a number that jumped to 898 in fiscal year 2012. So far in fiscal year 2013, there have been more than 560 criminal identity theft investigations opened.
  • Total enforcement actions continue to rapidly increase against identity thieves. This category covers actions ranging from indictments and arrests to search warrants. In fiscal year 2012, enforcement actions totaled 2,400 against 1,310 suspects. After just four months in fiscal 2013, enforcement actions totaled 1,703 against 907 suspects.
  • Sentencing of convicted identity thieves continue to increase. There were 80 sentencings in fiscal year 2011, which increased to 223 in fiscal year 2012.
  • Jail time is increasing for identity thieves. The average sentence in fiscal year 2012 was four years or 48 months -- a four-month increase from the average in fiscal year 2011. So far this fiscal year, sentences have ranged from four to 300 months.
  • By late 2012, the IRS assigned more than 3,000 IRS employees -- more than double from 2011 -- to work on identity theft-related issues and the IRS has trained 35,000 employees who work with taxpayers to recognize identity theft indicators and help people victimized by identity theft.

Phishing

Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft, the IRS said.

Return preparer fraud

The IRS reminds all taxpayers that they should use only preparers who sign the returns they prepare and enter their IRS Preparer Tax Identification Numbers (PTINs). IRS.gov has general information on reporting tax fraud. More specifically, you report abusive tax preparers to the IRS on Form 14157, Complaint: Tax Return Preparer. Download Form 14157 and fill it out or order by mail at 800-TAX FORM (800-829-3676).

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