Page 70 - Pay Magazine s2014

Government watch
Tag Team: IRS and Industry Fight Tax Refund Fraud
via prepaid—the most convenient and inexpensive refund option for underbanked taxpayers.
“Legislating a prohibition of tax refund payments to prepaid cards does not address the need for the increased veri cation measures
at the point of the tax ling before the payment distribution method is taken into account,” says Paul Landry, senior vice president
of operations for prepaid issuer The Bancorp Bank, which works with the IRS as an NBPCA member. “Such restrictions would cause an avalanche of underserved citizens going back to receiving a paper check, which is inconsistent with
Beware of Phishermen
the government’s objectives,” he tells Pay Magazine.
Trent Sorbe, president of Central Payments, the prepaid issuing division of the Central Bank of Kansas City, agrees that e orts should be focused at stopping fraud on the front end. “Focusing on the destination of fraudulent refunds rather than improving
the return submission and re- fund payment process likely would result in few meaningful improve- ments,” Sorbe tells Pay Magazine. “The more legislators and regula- tors understand prepaid products, the better the opportunity for the industry to o er up real solutions
to combat the problem of tax fraud.”
Stepping Up Defenses
The industry and IRS have identi- ed several potential steps to reduce fraud. One key issue is in the timing of how returns are processed. Under the current system, refunds are issued begin- ning in January. However, employ- ers aren’t required to submit W-2 forms until March, and the IRS— which is required to issue refunds in a timely manner—doesn’t begin matching W-2s with refund claims until July, so many fraudulent claims already have been paid out by the time any irregularities are
On Feb. 3, the IRS issued a warning for taxpayers to watch out for fake emails or Websites looking to steal personal information. These phishing schemes continue to be on the
annual IRS list of “Dirty Dozen” tax scams for the 2016 ling season, the agency said.
Criminals pose as a person or organization you trust and/or recognize. They may hack an email account and send mass emails under another person’s name. They may pose as
a bank, credit card company, tax software provider or government agency. Criminals go to great lengths to create Websites that appear legitimate but contain phony log-in pages. These criminals hope victims will take the bait to get the victim’s money, passwords, Social Security number and identity, according to the IRS.
“Criminals are constantly looking for new ways to trick you out of your personal nancial information so be extremely cautious about opening strange emails,” said IRS Commis- sioner John Koskinen. “The IRS won’t send you an email about a tax bill or refund out of the blue. We urge taxpayers not to click on any unexpected emails claiming to be from the IRS.”
Scam emails and Websites also can infect your computer with malware that gives the criminal access to your device, enabling them to access all your sensitive les or track your keyboard strokes, exposing log-in information.
Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during ling season as people prepare their returns or seek help with their taxes.
68