Taxpayer Beware

How to Spot Tax Scams and Avoid Fraud I Episode 2

February 17, 2021 California Tax Education Council Season 1 Episode 2
Taxpayer Beware
How to Spot Tax Scams and Avoid Fraud I Episode 2
Chapters
Taxpayer Beware
How to Spot Tax Scams and Avoid Fraud I Episode 2
Feb 17, 2021 Season 1 Episode 2
California Tax Education Council

From fake phone calls and emails to targeting your social media posts - scammers are getting more creative. Stealing not only your identity, but your tax refund. In fact, most victims have no idea it happened to them until they try to file their tax return. 

CTEC Chair, Brandon Chanley, chats with Elias Dominguez from the Franchise Tax Board Public Affairs Division. Hear what state is doing to stop fraud, including true stories, and the state's advice to taxpayers.

You can also find more tips on CTEC.org with links on how to find and verify a legal tax preparer.

Show Notes Transcript

From fake phone calls and emails to targeting your social media posts - scammers are getting more creative. Stealing not only your identity, but your tax refund. In fact, most victims have no idea it happened to them until they try to file their tax return. 

CTEC Chair, Brandon Chanley, chats with Elias Dominguez from the Franchise Tax Board Public Affairs Division. Hear what state is doing to stop fraud, including true stories, and the state's advice to taxpayers.

You can also find more tips on CTEC.org with links on how to find and verify a legal tax preparer.

Speaker 1:

Thank you for downloading taxpayer beware . This podcast was created by the California tax education council. A nonprofit organization required by the state of California to basically do one task and that's to protect you against fraud and help you find a legally qualified tax professional. Now here's your host, Brandon Shanley .

Speaker 2:

Hello everyone. I'm Brina Chamblee chair of the California tax education council or C tech for short tech was created by the state to basically do one task, protect taxpayers against fraudulent tax preparers. Anyone who prepares tax returns for you must be there Ctech registered. And if they're not, they must be an attorney, a CPA or an enrolled agent. So the good news is there are plenty of qualified tax preparers to help you with your taxes, especially in the state of California. The bad news is unfortunately, scammers are still out there and they're definitely getting more sophisticated with their tactics and the unfortunate part right now during the pandemic, some of those scanners even have more time on their hands. So that's what we're here to talk about today for episode two of how to spot tax schemes and avoid fraud. Joining us today is Elias Domingez from the franchise tax board, public affairs division. Um, you guys have heard us talk about franchise tax board before, so , uh, Elias, thanks for taking some time to talk with us today, either Brandon. Yeah, thanks for having me. Um, so yeah, as you mentioned , uh, um , my name is Elias Dominguez. I'm a public information officer to , with , uh, French tax board. So , uh, hopefully I can provide you all with just some helpful tips regarding tax far for this upcoming tax season. Great, thank you. Yeah. So , um, you know, something, you'll see it in the news and I'm sure our listeners are starting to see it as well. You know, this time of year, there's always these hot buttons of things that you're going to hear in the media, you know, see in the media about, Oh , it's tax time, it's tax time, you know, but there's, there's definitely a couple big ones that stick out to me and I'm sure to you as well, but refund fraud and identity theft. And those are probably the two biggest things that you're going to hear this time of year during tax time, since, you know, the IRS just opened on Friday to start accepting returns and, you know, on February 12th they opened up. Um, so I , I think those, those messages are going to be even amplified even more here in the next few weeks. Is that something you feel is accurate? Um, definitely. Yeah . So , um, yeah, as you mentioned, you know, IRS started excepting their returns. We've been accepting returns since January 4th. So , um, yeah, I mean the complaints that we tend to see the most involved , you know, a taxpayer , um, you know, receiving either a letter or maybe even an email asking for their personal information and , um, you know, and this is either to either release their refund or process their tax return . So , um, you know, while while many these complaints, they

Speaker 3:

Turn out to actually be a legitimate request room, a FTB, you know, we always encourage our taxpayers to remain on high alert whenever they receive any sort of requests for their personal information.

Speaker 2:

So that's , yeah, that's very interesting that you mentioned that too. And I think, you know , especially when you're dealing with something as a sensitive and important as a tax return, I think anybody can fall into that habit of thinking any message they get from anybody must be important. It must be relevant. Um, you know, we've talked about it before and it is a hot button and kind of like I've mentioned as well. I mean, some of these scammers may even have more time on their hands right now during this time of the year. Um, could you kind of explain from your side, you know, like how do , how do most of these scams work that you see? Like, what are some of the things that , that you've seen or heard of happening in the way they happen? So we can educate the , uh, the taxpayers listening today on, on what to look for

Speaker 3:

Four and how to avoid it . Sure. So, yeah, as you mentioned, I mean , uh , these scans are , are basically a form of ID theft. So , uh , the scammer they'll use , um , stolen, personal identifying information, or you might hear PII mentioned. Um, so they'll, they'll use things like a social security number, your name, address , um, other pieces of information , um, L uses to file a tax return in the victim's name and the scammer will actually have the refund sent to them. So , um, you know, many times the , the victim of this scam, they're completely unaware that their information has been stolen and the refund has been stolen until we either contact them or until they actually go and, and , um, try to file their return. And then they realize, you know, this has happened to them. So , um, you know, the, the scammers they'll often , uh , pose as either a tax official or , um, you know, even the taxpayer's employer, you know, they get really creative. So they'll , um, you know, send an email messages or make a phone call trying to solicit sensitive information, such as a W2 or just any other personal information that could get their hands on. So , um, and these messages, a lot of times they look completely, you know, legitimate, it looked like , uh , you know, a company that you might know and trust. Um, so, you know, if you ever get a call or email , um, you know, you gotta just ask yourself if you questions, you know, do I have an account with this company? Um, you know, and why would they be contacting you? Um, and who's the person contacting you. So , uh , if you're not sure about any of these , uh, questions and answers, I mean, just, it's simple, just don't engage, don't respond to the email. Um, and if it's a phone call , uh, simply just, just hang up. Um, you know, I have a story , um, something happened to me and , um, you know, I'm actually, I'm a really skeptical person by nature when I get a phone call, I'm just assuming, you know, someone's trying to scam me. Um, but I got to

Speaker 2:

I'm the same way, same way.

Speaker 3:

Yeah. So I got a phone call , um , a few months ago and it was from a utility company or, you know, so I thought, and, you know, they had my name, my address , um, you know, you know, information , um, you know, about me and they let me know that my bill was past due and in order to continue my service, you know, I needed to make a payment. Um, and actually, I, you know, I was looking for my wallet. I was getting ready to make a payment. Um, and then, so the person that actually, you transferred me over to someone else , uh, and then I, you know , uh , like a light bulb finally went off and I'm like, Hmm . You know, it sounds kind of fishy. Uh , cause the second person that I talked to you didn't sound as professional as the first one. Um, luckily enough for me. So, you know, I had a second thought and so I just, I hung up. I , you know, I didn't feel right about it. Um, so, you know , uh , there was the phone number actually showed up on my phone. So , um, you know, thank God for caller ID. So I Googled the phone number and sure enough , um, that phone number came up linked to a number of other uh Scamps . So , um, you know, it really does pay just to do a little bit of due diligence. I mean, don't feel bad about hanging up and being rude, just , um , you know, it takes a couple of seconds for you to just , uh , hang up , um, you know, Google the phone number, or if it's an email, a Google, the number or information that's on that email. And just to make sure that it's in fact linked to either a legitimate FTD number or, you know, you might find out like I did that, you know, it's, it's not a legit number and it's linked to a number of other scams.

Speaker 2:

Yeah. I think in today's age, you know, we're, we're constantly buying more stuff online, shopping, online, doing things online and all that does is expose us and it exposes, you know, our, our information. And right now, you know , during tax time, these scammers look for this opportunity to be able to file a bunch of tax returns quickly and have it all filtered into their, into their out . So I think exactly what you're saying there, that, you know, if it walks like a duck and sounds like a duck, it's probably a duck. So it's, there's, there's way to look at it and , and make sure that that you're not getting scanned or , um , you know, to make sure that the company is legit, that's reaching out to you.

Speaker 3:

Yeah, definitely. Um, and you know, like I said, it just takes a couple of minutes for you to just , uh , you know, do a little bit of research. Um, and you know, it definitely pays off because the , um, you know, the impact to a taxpayer, if you get scammed is huge. Uh, I mean, you know, ID theft victims, they can be exposed to credit card abuse , um, you know, stolen government benefits. And , um, you know, like we mentioned tax refund fraud. So , um, you know, in addition to refund fraud , um, you know, you can , uh, also experience , uh, delays in processing your returns because , uh, once you become a victim of fraud, it actually becomes harder for FTB to determine if , um , we're dealing with the real taxpayer filing a return, or if it's a scam or trying to file , uh , you know, for them. So , um, you know, the real tax payer , when it comes time to file, they may experience delays in getting their refunds , um, because they'll have to go through additional reviews from FTB to make sure that we're actually getting the right amount of money to the right person. So , um, yeah, there's, you know, it's really simple, there's a number of things that taxpayers can do , um, you know, to protect themselves. Um, and we always say, you know, the , the strongest defense against ID theft is just a practice safe computing. Um, and you know, this comes , um , you know, when we're talking about storing sensitive information , um, you know, sharing your information with others, it could really be as simple as keeping your computers , uh, security software up to date , and just being cautious about giving out your personal information. Um, so for you , um, you know, or your tax preparer, this , uh, you know, basically means, you know, using a firewall that keeps your computer secure , um, and your software , um, that automatically updates to protect against viruses. Um, and nowadays, I mean, you know, it's really simple to get this software , um, and, you know, firewalls to protect your , your computer against viruses. So , um, another simple tip, you know, always use strong passwords , um, and even pass phrases to protect your , your personal accounts , um, you know, and, you know, as important as what information you share with others , uh, it's how you share it. So , um, you know, under no circumstances, should you ever , uh , send either a tax return info or any personal information over public networks , uh, such as social media , um, you know, only, only provide data through trusted websites. Um, you know , uh, as you mentioned , um, Brandon, you know, with no internet , it's so easy to share information. And a lot of times people are completely unaware that they're actually sharing personal information over the internet. Um, I , um , you know, one example that I give a lot is sometimes, you know, social media is meant to be fun a lot of times, and you might see those threads that it's like, Hey , um, you know, answer these questions and it'll be something fun. Like, you know, where do you honeymoon two , how long have you been with your husband? What's your , um, you know, your , your marriage date and just random things like that. Like, what's, what's your favorite car and you're annoyingly sharing , um, possible passwords to your accounts and just information that hackers may use , um, you know, to hack your account. So just be wary of things like that on, on social , um, especially if your social media accounts are public, because scammers will use this information to try to hack your accounts and gain access to your information.

Speaker 2:

That's yeah, those are some good tips too. And, you know, something I'd like to add as well, and you , and you hear it this time of the year, IRS even talks about it too, but you know, the quicker you file your tax return, you get your tax return filed each year , um, you know, could less exposure, right? So I mean, people are, people are looking if they're looking for, to commit tax fraud or identity theft through tax fraud. I mean, they're going to strike while the iron's hot, which is during tax season. So, I mean, if you can, if you can get in there and get your return filed , especially , you know , using a professional using, you know, someone that's been through Ctech and the state of California, that's registered and understand all the tax laws and understand how to help you out. Um, that could be a real critical piece too . Um, you know, I've even heard of , of some folks that , uh, maybe not have to file per se , you know, for, for whatever reason, but they've actually went and filed a tax return just to make sure that no one else is stealing their identity. You know, we I've, I've heard of scenarios like that in years past where somebody that didn't have to file, you know, went in, filed a tax return and then found out, Oh, this, this social security number is already been, or have been used to file a tax return. And lo and behold, they had, they had been a victim of identity theft. Wouldn't even have known it if they didn't do a tax return or didn't file a tax return , um, during the tax season. So, you know, there there's ways to protect yourself and you've laid out a lot of good ones, but that's , that's also a piece to look out for.

Speaker 3:

Yeah, exactly. I mean , uh , the quicker you follow your return, the less time you're giving , uh , you know , scammers time to , um, you know, to commit fraud. So yeah, definitely a good tip there. Um,

Speaker 2:

Yeah, something I wanted to ask you too, so, you know, so we can educate the listeners as well. So from a franchise tax board standpoint, so let's say that, you know, on the FTB side, you guys get a tax return that you say, you know what, we need a little more information, or we need to find out about this tax return. How would FTD go about contacting the taxpayer ? What would that process look like? So, you know, so that way people can know if they do have this scenario that it isn't, you know , possibly a scam, it is maybe widget what's , what's kind of how does that process work?

Speaker 3:

Yeah. So , uh , if FTB has any questions about your return , um, more times than not, we're going to reach out through postal mail, seeking clarification. Uh, we will never email you. So that's very important that you know, that , um, if we do call , uh , which is rare, we'll only do so if we can't reach you by letter. So, you know, if you're not sure that the call is legitimate , um, you can always, like I said, hang up , uh , you can call our 800 number it's +1 800-852-5711, or you can call the number on the form that you get. Um, or like I said, just , um, you can simply Google the number on the form and make sure that , um , that is connected to FTB. So, you know , um, like we mentioned, if you do get a letter from us from MTV , uh , just respond as soon as you can, the sooner that we get our questions answered, you know, the sooner we can process the return and get you a refund. Um, however, you know, if you do receive a bill or requests for payment that looks suspicious, you could simply go to our website at , uh , ftb.ca.gov, you know, verify , uh, our mailing address on our website. And we actually , uh, we even have samples of the actual letter that we send you, and you can ensure that the notice is legitimate. So , uh , you know, taxpayers , um , like I mentioned, you can go to our website , uh , to get more information. Uh, we actually have a tech scan page with , uh , details on various scams and a link to report them. So again, that's a ftb.ca.gov.

Speaker 2:

Well, that's good. So you can, so you guys update that on a regular basis. Like if there's some kind of different scam that's going on or ones that you've seen, so do you guys update that page on a regular basis?

Speaker 3:

We do. Yeah. I mean , um , there's, there's always new scams going on and we work really closely with our , um , criminal investigations Bureau to , um, see, you know, what new scams are out there. So we're definitely , um , always updating our website

Speaker 2:

And , and just to, for our listeners as well, and always keep this in mind too. I mean, some people are hesitant to report things like this. Um , we would beg of you, please do that. You know, you're , we have ways to keep it to where you'll be anonymous, so you're not going to get in trouble for reporting something that's going on. And even if you think it think it is, but you're not for sure just report it up to, you know, FTB or Ctech even, just to be sure. And let us look at it, investigate it, find out what's going on because, you know, you want to , not only are you protecting yourself, you're gonna be protecting others too, because you know , these scammers, unfortunately though, will prey on anybody. They don't, they don't care. They'll go after anybody. They can. So the more reports we get of this and we can look into it and see what's going on, just helps you and helps the, you know, the tax community.

Speaker 3:

Yes. Uh, that, yeah, that's great advice. I mean , um, I believe the last time I checked the number, it was somewhere between 68 to 70% of , of taxpayers actually use a tax prepare , uh , to file their taxes. Um, and, you know, unfortunately , uh, tax prepares they've increasingly become targets for cyber criminals . Um, so, you know, you just have to ask your tax preparer , how they protect your , your data and your information. Um, they , they should all have tight policies for how they store , um, and delete your files after use. Um, you know, a lot of times you , you know, you think, Oh, only the taxpayers , a victim of , of tax fraud, but no , um, you know, definitely the tax are also targets as well.

Speaker 2:

Yeah. And you know, this as a tax payer, I mean, this is, you know , in some cases, this one is , this is one of the biggest financial transactions you do all year long. And you know, it is, you know, your, your tax payer is, is in charge and they are in charge of protecting your data and making sure your data is safe. And, you know, all the , you know , the people that are out there that are doing it legitimately, they all have a process in place. So I think that's a great tip, you know, talk to them about it and say how , you know, how's my stuff's going to be protected. What's the things that you do. I think you'll be, you know, most, most that are doing it the right way are going to feel very comfortable telling you how they do that and how they keep you safe. Um, and if , if you don't get that information from your taxpayer or tax preparer, and , and they seem to not really know the answer to that question, you know, maybe it's time to look for somebody else. So maybe , maybe you need to change your mind on who's going to do your return if that's the scenario.

Speaker 3:

Yeah, exactly. I mean, it's not just their job to file your taxes. I mean, it's their job to protect your information. So , um, yeah, I mean, you know , don't feel bad about asking your tax repair , um, you know, how they protect your data and , um, you know, always make sure your tax preparer has a professional organization affiliation. Um, you know, one who can assist you if the IRS or the FTB contacts you for an audit , uh , of your tax return.

Speaker 2:

That's a good one too. I mean, we've , we've talked about on some different podcasts, but the word ghost prepared or scary for a reason, you know, and though those ghost preparers are those that are doing a return, not signing it, I'm not going through SciTech to get registered things of that nature. Uh , I guarantee they're not affiliated with any professional organization . So if the IRS or the FTP comes knocking and they have questions, just think in the back of your mind, okay. Is my tax preparer going to be able to help me through this situation or, or the group that they're affiliated with, you know, such as a CPA group or the society of enrolled agents, things of that nature.

Speaker 3:

Exactly. Yeah. And , um, you know, our , our website , um , actually has a list of the members I'm calling check out . Um, you know, if you want to check , uh, uh, credentials for either a CPA or a tax attorney , uh , we have all those numbers and websites listed on our, on our website. So, yeah.

Speaker 2:

Great. Yeah. And then also on ctech.org , you can double check and make sure your preparer has, has done the requirements in the state as well. That's good. Yeah. So it's just some other tips and we've, we've talked about it on some other podcasts, but just to kind of remind everybody things to look out now for, you know, if they're basing their fee on a percentage of your refund amount, that's, that's a red flag. There's something going on there. Um, if it sounds too good to be true, it probably is. Right. And, you know, again, you know, no matter who prepares your tax return, you're legally responsible for the accuracy of that. So always keep that in mind, you know, if you feel uncomfortable with what's being addressed or what's being put on your tax return, just know that that's going to be reviewed and looked at by the IRS FTB, things like that. And they may have questions for you. So, you know, the importance of , um, making sure that that you're choosing, choosing wisely is important, you know, filing early is important. Um, looking out for the things that Elias had mentioned to, to, to keep from, you know, any kind of fraud or ID theft or things of that nature from happening, just be smart about it. And if, if you get a message or get an email that looks funny with some kind of weird attachment, you know, reach out to the person that did your tax return say , Hey, I just got, this is this from you. Um , and just be, be careful, be careful when you're out there and use the resources FTPs website C tech.org as well is also a good one. Um, you have anything else that you wanted to add or why us before I wrap up here? Um,

Speaker 3:

No , we , we covered a lot, but yeah. I mean , um, as we mentioned before, you know, tax season is officially open with the IRS and FTB , so , um , yeah, it definitely helps to, to file early. Uh, if you have any questions at all , um , don't hesitate to give us a call and , uh , you know, if you're worried about, you know, long wait times, we actually even have a wait times page. So , um, we have a number of different ways you can contact us, it's , you know , secure chat, email, phone number , um, and you can check out, which is the quickest way to contact us. So , um, yeah, so I'm looking forward to this tax season.

Speaker 2:

Excellent. Excellent. Yeah . Thank you so much for joining us. I really appreciate it. Um, you can hear more about avoiding scams on episode one, where we chatted with Rebecca Landeros , she's our enforcement partner over at FTB as well. And she's the one that actually knocks on scammers doors. So she has a very unique perspective on what to look for when choosing a tax pro . So if you want to check that one out or any of our other podcasts, and you can check those out on our website, C tech dot or org. So that's ctc.org . I appreciate your time Elias and for all the listeners. Thanks for joining us today.

Speaker 4:

Thank you .