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IRS Warns of Tax Rebate Phishing Scam

By IBLS Editor

The Internal Revenue Service is warning taxpayers that a clever new email and phone scam has been hatched to defraud those looking for the tax rebate that President Bush has been promoting as part of an emergency stimulus package to battle the recent U.S. economic downturn. The fraudsters are trying to take advantage of a rebate that the Government has yet to enact that would direct the IRS to refund tax payments. The con artists are also using other tactics to gain access to victim accounts, which are listed below.

The overall method used by the criminals is "phishing," or to trick the credulous into offering up revealing personal and financial information, such as Social Security, bank account or credit card numbers, which are then used for identity theft. This information can be employed to drain financial accounts, max out the victim's credit cards, and also create new lines of financing, such as applying for loans, credit cards, and other services and benefits. The Government believes much of the activity is launched overseas as such crimes are often committed electronically from remote locations.

Recent scams the IRS has discovered include:

Rebate Phone Scam: Thieves have been calling people and using word "rebate" to help lure the person into sharing their financial and personal data, letting the intended victim know that they are eligible for a large rebate for filing early tax returns. The caller then says he needs the person's bank account to direct-deposit the rebate. If the target refuses, he is informed he will not be eligible for the rebate. If a person calls up and claims to be from the IRS offering to help with the new tax refund, realize that it has not been passed and that this is not an IRS department function, in any event.

Email Refund: There are bogus emails being sent out that claim the recipient is eligible for a tax refund of a given amount and then instructing the recipient to click on a link to access a refund claim form. This form instructs the person to enter personal information that the criminals then use for financial fraud. In a twist, a new version of the email includes a couple of paragraphs regarding tax-exempt organizations that send the funds to other organizations or individuals. It finishes listing the supposed signature of the Director of the IRS's Exempt Organizations business division. But according to their website, "The IRS does not send unsolicited e-mail about tax account matters to individual, business, tax-exempt or other taxpayers."

Email Auditing: In an absolutely novel scam the IRS claims to have never seen before, the fraudsters are using the fear of a tax audit to get the victim's attention. The recipient receives a personalized email addressed to them by name. This is novel because most scam e-mails are sent using the same technique for hundreds of thousands of messages. Because of the volume, the typical scam e-mail is not personalized. But here, the forms are linked and the victim is asked to fill them out which the phishers then use to complete their scam. But according to their site, "The IRS does not send unsolicited, tax-account related e-mails to taxpayers."

Tax Law Change Email: This e-mail comes addressed to businessmen, accountants and "Treasury" managers, telling them to download instructions on tax law changes by clicking on links. These links go to pages regarding, "businesses, estate taxes, excise taxes, exempt organizations and IRAs and other retirement plans." As seen in many other scams, following these links will download malware onto the intended victim's computer, that can then be used to release private information, or turn the computer into a robot to be controlled remotely by the criminals to perpetrate further cons. The IRS reminds the public that the url addresses are spurious, and that all genuine IRS emails use their Web addresses beginning with http://www.irs.gov/.

Phone Call Verifying Uncashed Check: In this scam, the fraudsters call and identify themselves as an IRS employee who is trying to verify why the tax check sent by the IRS has not been cashed, and now the IRS is trying to verify the taxpayer's bank account number to straighten out the issue. Suspiciously, these callers often have a foreign accent. Of course, the IRS would not make such a phone call. They state on their website, "The IRS has no business need to know, and does not ask for, bank account or similar information...the IRS does not contact taxpayers to verify the information."
It is doubtless that many of these scams derive from the famed and nefarious Nigerian fraudsters. But today con artists have been empowered by the Internet and literally every email received needs to be carefully vetted before response.

Full post as published by IBLS Internet Law Blog on February 05, 2008 (boomark / email).