Anyone can be a victim of tax fraud and scams

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Mar 7

Tax fraud has been on the increase in recent years.

In fiscal year 2022, IRS Criminal Investigation identified $5.7 billion in tax fraud, initiated 1,388 criminal tax investigations and obtained 699 criminal sentences for tax crimes. That compares with $2.19 billion identified in tax fraud in 2021.

"Every year we identify billions and billions of dollars in tax fraud — both domestically and internationally," Yuri Kruty, IRS Criminal Investigation special agent in charge, said in a recent interview with MediaNews Group.

He explained the office is staffed by about 2,000 special agents and other staff — both in the U.S. and globally — investigating criminal violations of the Internal Revenue Code.

The office's special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, and has a more than 90% federal conviction rate. The agency has 20 field offices in the U.S. and 12 attache posts abroad.

The criminal office is different from the civil arm of the IRS, which answers questions or conducts audits, Kruty said.

"If criminals are perpetrating the crime, they need to know we will come for them wherever they are — in the U.S. or if they're sitting in a foreign country," he said. "We will go after them, and we will do everything we can to put them in jail for the violations they commit."

No one is immune

Jeanettee Hassis is a senior manager with CPA Advisory Firm Herbein + Co. Inc. She works with individuals and business clients on tax planning and says anyone can be exposed.

"They can go after anyone, whether they're working with a professional tax preparer or not," Hassis said. "It doesn't matter what walk of life you come from, it doesn't matter what socio-economic class you're in — anybody can be a target."

Kruty agrees, adding that from his perspective the elderly tend to be a more susceptible group to be victimized.

"There are a lot of impersonators that call people saying they are representatives of the IRS and asking for people's personal information," he said.

"They are vulnerable — more trustworthy," he said. "Those making the calls or emails or texts, they threaten them or try to scare them. They know certain people will fall for the scare tactics."

Kruty said that bcause they are more trustworthy some elderly fall for it and provide information more readily over the telephone or electronically to people to whom they shouldn't be providing information.

Robert Eastwood is senior vice president, chief information security officer for WSFS Bank. In his role, Eastwood works with cross-functional security, operational risk and financial crimes teams to prevent, detect and take action to mitigate the impact of financial crimes on the bank's customers, clients and associates.

"Scammers target all sorts of victims, both consumers and businesses," he said. "Consumers are often targeted via emails, text messages, phone calls and mail claiming to be from the IRS or another government agency, often times claiming the consumer owes money and using threatening language.

"For businesses, scammers will use many of the same tactics, but often targeted toward business professionals in a role that has access to sensitive information, like human resources. Those efforts include trying to infiltrate company systems where scammers may spoof legitimate company emails to get unsuspecting employees to share compromising information.

Hassis agreed it's important all employees know they need to be vigilant, and it's a message Herbein + Co. stresses.

"Because we have so much confidential client information in our system, we have to make 100% certain that there is no penetration," Hassis said.

Red flags

A key point during tax season, according to Kruty is to beware of dishonest tax return preparers.

"These are tax return preparers who disregard their known duty to prepare accurate tax returns on behalf of their clients," he said. "Such tax return preparers have no problem putting their clients at risk for a profit."

According to IRS Criminal Investigation, there are some tips for avoiding tax fraud:

• Look for a preparer who is available year-round.

• Ask your tax preparer for their IRS Preparer Tax Identification Number (PTIN). All paid preparers are required to have one.

• Don't use a ghost preparer.

• Don't fall victim to promises of large refunds.

• Don't sign a blank tax return.

• Make sure your refund is deposited into your account, not your tax preparer's.

• The IRS will not call you threatening legal action.

• Don't respond to or click links in text messages, emails or social media posts claiming to be from the IRS.

• Protect your personal and financial information. Never provide this information in response to unsolicited text messages, emails or social media posts claiming to be from the IRS.

• Report fraud to law enforcement. Submit Form 3949-A, Information Referral, if you suspect an individual or a business is committing fraud.

When it comes to emails, Hassis encourages clients to sign in directly to their account rather than clicking links.

"If the correspondence is legitimate, when they open the account, they will see the correspondence in the account and confirm if its's legitimate," she said. "Links may be convenient, but sometimes that convenience can be costly."

Kruty said the IRS sends formal letters and if a special agent needs to go to someone's residence, they identify themselves and provide credentials so people know exactly who they're dealing with.

Job openings

Kruty said the IRS-CI is the smallest branch of the IRS, but is growing and hiring professional staff and special agents. He said special agents have a mandatory retirement age of 57, and over the years the number of agents has decreased. To find out about the openings with Internal Revenue Service Criminal Investigation visit USAJOBS.gov.

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