Ohioans are increasingly targeted with tax-related scams, with some victims reporting getting fleeced out of tens of thousands of dollars.
“The trend lines are bad — in other words, we’re seeing more and more of them,” said state Attorney General Mike DeWine.
The most common scams involve fake IRS agents targeting people with harassing phone calls demanding payment and threatening jail, and identity thieves using stolen personal information to claim fraudulent tax refunds in the victim’s name, DeWine said.
Prime Time Party Rental owner Bart Nye received a phone call in November from someone claiming to be with the IRS who was demanding back taxes. The caller’s tone was threatening, he said.
“She said if I hung up the phone there would be somebody right over to arrest me,” Nye said.
Nye didn’t owe taxes, but he called his accountant, J.R. Hochwalt, to be certain.
Hochwalt, a partner at Flagel Huber Flagel in Dayton, said the firm had five other clients receive similar, threatening calls within a month’s time.
“Most of them figured out it was a scam, but they still call with doubt and hesitation in their voice,” Hochwalt said.
The Internal Revenue Service said many of these con games peak during tax filing season, when millions of Americans prepare their tax returns or hire a professional to do so before the April 15 deadline.
Nationally, nearly 3,000 people since October 2013 have fallen victim to the IRS imposter phone scam, collectively paying more than $14 million as a result of the ruse, according to the U.S. Treasury Inspector General for Tax Administration. The TIGTA received reports of about 290,000 contacts over that period, officials said.
From 2011 through October 2014, the IRS stopped 19 million suspicious returns and prevented more than $63 billion in fraudulent refunds from “going out the door,” said Jennifer Jenkins, a Columbus-based IRS spokeswoman for Ohio.
“The ID thieves are ultimately stealing from the taxpayers nationwide,” Jenkins said.
Threatening phone calls
DeWine said hundreds of Ohio consumers have called his office to report receiving aggressive and threatening phone calls from con artists impersonating IRS agents. The bogus agent claims the person must send immediate payment for unpaid taxes or face arrest, license revocation, property repossession or deportation.
“I think the reason these scams sometimes work is that people are scared to death of the IRS,” DeWine said.
Officials said the scam artists use fake names and bogus IRS badge numbers. Some spoof their phone number with a “202” area code to make it appear as if the call is originating in Washington, D.C. on the recipient’s Caller ID.
The callers demand immediate payment using a wire transfer or prepaid debit card, which are not connected to a bank account, making them harder to trace than a bank card.
In Ohio, several victims reported sending between $2,000 and $28,000, DeWine said.
Paula Davidson of Kettering called DeWine’s office after she received a call from someone claiming to be with the IRS and demanding money. That caller said the IRS was filing a lawsuit against her over unpaid taxes.
“I feel it is our duty to report these things and try to help others,” Davidson said.
DeWine said actual IRS agents typically contact people by mail, and never demand payment by debit card, credit card or wire transfer.
“You have every right not to deal with somebody over the phone about this and to demand that they send you a letter,” DeWine said.
“What these con artists are counting on is that the people on the other end of the phone will get so nervous and so scared that they’ll take action right away. Whereas, if they had the chance to think about it for a day, they probably wouldn’t do it,” he said.
Stolen identity
Tax-related identity theft occurs when someone uses a stolen Social Security number to file a tax return claiming a fraudulent refund.
Nationally, the Internal Revenue Service initiated 1,063 identity theft-related investigations in fiscal year 2014. Criminal investigation enforcement efforts resulted in 748 sentencings last year, a 75 percent increase from 438 in fiscal 2013, officials said.
One of the IRS’s top 10 U.S. identity theft prosecutions for fiscal 2014 involved a Columbus-area man. Roma L. Sims of Westerville was sentenced in August to more than eight years in prison and ordered to pay $3.5 million in restitution to the IRS for committing aggravated identity theft and wire fraud and conspiring to commit identity theft in a scheme to defraud the agency.
According to court documents, Sims was responsible for the preparation and filing of nearly 980 income tax returns for 2010, 2011 and 2012 tax years, which netted more than $3.5 million in bogus income tax returns.
DeWine said the consumer-protection section of his office received 553 tax-related identity theft complaints in 2014, a dramatic leap from about 100 complaints in 2013, making it one of Ohio’s top consumer complaints last year.
“Keep in mind that the vast majority of people who get ripped off for anything don’t call the attorney general’s office, so if we’re getting 553 complaints in 2014, we know there are thousands and thousands of these that actually occurred across the state of Ohio,” DeWine said.
Carissa Hostetler of Kettering was stunned to learn somebody had used her name and Social Security number to file a tax return and claim her refund.
“Now I have to prove who I am to get my own money back,” Hostetler said.
Hostetler said she had to fill out IRS identity theft affidavit forms, check her credit score, and flag her Social Security number to make sure other data about her hasn’t been, or doesn’t get, stolen.
She was told it could be late summer before she gets her refund.
“Ultimately, the legitimate taxpayer will get the refund that he or she is due,” Jenkins said.
Protecting victims
Often, the IRS is the first to detect that a taxpayer is the victim of identity theft.
“Sometimes that first notice comes when somebody filed their tax return and it gets kicked back because we’ve already seen a return filed by someone using this name and Social Security number,” Jenkins said.
That was the case in February for two Springfield residents who filed police reports stating their tax returns had been filed fraudulently. Both were notified by the IRS that 2014 tax returns had been filed using their names and addresses, before they actually filed themselves.
Jenkins said the actual theft of personal information, such as a taxpayer’s name, Social Security number or birth date, typically happens outside the IRS.
To help stop identity theft, the Ohio Department of Taxation has started to quiz some taxpayers to confirm their identities before giving them their state tax refund.
The four multiple-choice questions are being used for the first time this year to make sure a tax return submitted in someone’s name is genuine and not an attempt by an identity thief to collect a refund check.
Nearly 1 million taxpayers have taken the quiz and most have passed it, said Ohio Tax Commissioner Joe Testa. However, the state tax department had to tweak some questions to cut down on those that people couldn’t respond to because they were obscure or outside recent memory, officials said.
On the federal level, the IRS has increased screening and filters to look for “red flags” in tax returns, Jenkins said. The agency also is limiting the number of refunds that can be deposited to a specific account.
To help past victims, the IRS has issued about 1.5 million Identity Protection PINs – a unique, six-digit number that is assigned annually to victims of identity theft with resolved cases for use when filing their federal tax return.
This year, the IRS will continue its IP PIN pilot program to allows taxpayers who filed tax returns last year from Florida, Georgia or Washington, D.C. to opt in to the program.
In addition, the IRS is offering 1.7 million taxpayers the opportunity to opt into the program in instances where the agency has identified signs of identity theft on their accounts.
Taxpayers use the IP PIN instead of their Social Security number when filing their return. “That’s one way we can screen out the bogus ones,” Jenkins said.