IRS Warns of Phony E Mails- Be careful

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'Phishing' Season For Tax Scammers

IRS Warns Public Of Phony E-Mails

By Caroline E. Mayer

Washington Post Staff Writer

Saturday, February 25, 2006; A01

Marketing pitches masquerading as the 1099 forms detailing non-

payroll income have been arriving in taxpayer mailboxes, while e-

mails that appear to be from the Internal Revenue Service are really

identity theft scams designed to collect personal financial

information.

Government officials say they are currently seeing about one

widespread IRS-themed e-mail scam a week, but Internet security

experts expect them to escalate as the April 15 tax deadline nears.

" Usually these things peak around the time taxes are due, " said Dan

Hubbard, senior director of security and research for the Internet

Web security firm Websense. " Basically it's another timely current

event that's on top of people's lists and another lure to deceive

people into giving away credentials in some way. "

And scammers are capitalizing on the fact that more than half of all

tax returns are expected to be filed electronically this year.

Consider this recent e-mail claiming to be from the IRS: " You filed

your tax return and you're expecting a refund. You have just one

question and you want the answer now. Where's My Refund? Access this

secure Web site to find out . . . "

The Web site looked like the real IRS site. But it wasn't.

Nor was the Web site link in another recent e-mail using what

appeared to be IRS letterhead, posing as notification to the

recipient of a $63.80 refund.

Both Web sites asked for Social Security numbers and credit and bank

account information, part of an online identity theft scheme known

as " phishing. "

The IRS warns consumers to disregard any e-mail that purportedly

comes from the agency. " The IRS does not communicate with taxpayers

electronically, " said te, the IRS commissioner of wage

and investment. " If you get a communication from the IRS, it is via

a letter in the mail or a phone call. " If in doubt, consumers should

call the agency's toll-free number, , to determine the

legitimacy of any notice, te added.

The electronic solicitations are proliferating at the same time that

tax forms are flooding U.S. mailboxes. Most are legitimate 1099

forms sent by companies to individuals declaring dividends, interest

and other non-wage incomes they must report to the IRS.

However, a number of these letters are promotions -- usually for

loans to refinance a house, consolidate debt or buy a car -- dressed

up as a tax form to get a consumer's attention amid the everyday

clutter of bills and advertisements.

For example, there's the envelope with bold lettering

stating: " Important: Year End Tax and Mortgage Information

Enclosed. " Inside appears to be a 1099 form for $1,000 to $10,000

of " Lost Non Deductible Interest " that the taxpayer would get from a

debt consolidation loan. In the fine print, the letter is called

a " Form 1089. " There is no such IRS form.

These letters " come around every year " during tax season, said

J. Krenn, spokesman for the U.S. Postal Inspection Service, which

probes misuse of the mail system.

While government look-alike mailings " are less than desirable, "

Krenn said they are not an overwhelming source of loss to consumers.

The chief problem seems to be that some consumers have reported

throwing away the real 1099s with the batch of promotions they've

received.

Government officials said they first started noticing the phony IRS

e-mails last year around tax time. They disappeared, only to

resurface in November. Since that time, the U.S. Treasury Inspector

General for Tax Administration (TIGTA) has received about 1,100

complaints from consumers. Benton, special agent in charge

of strategic enforcement, yesterday said TIGTA has identified at

least 12 separate schemes of e-mails impersonating the IRS. Almost

as soon as the agency shuts down one Web site, a new one appears.

The scammers " are trying to leverage the trust of a government

agency and trying to increase the odds of success, " said

Cassidy, secretary general of the Anti-Phishing Working Group, an

association of financial institutions, online retailers, Internet

providers and security firms and law-enforcement officials committed

to eliminating phishing.

The IRS is an obvious target for scammers, Cassidy added, because it

has far more direct correspondence with consumers than a credit

union or even a large bank. " Blindly phishing a very small pond, the

odds for success are low, but phish an entire U.S. taxpaying

population, and the probability of success goes way up. You're

phishing a much bigger pond. "

The phony tax e-mails are not confined solely to the IRS, said

Hubbard of Websense. He said his firm has also seen some fraudulent

solicitations allegedly from H & R Block, offering online tax

preparation services. The taxpayer is steered to a fake company Web

site that asks for personal financial information.

H & R Block said it is aware that scammers periodically use its name

and credibility to phish. " When we become aware of these phishing

attempts, we investigate promptly, " said Murray Walton, the

company's vice president and compliance officer on phishing scams.

© 2006 The Washington Post Company