Arrests Made in IRS Scam Call Center Probe; Dark Web a Home for Stolen Tax Information

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In New York Times Article on Call Center Tax Scams Highlights How Criminals Prey on Our Citizens Fear of IRS I discussed how a New York Times reporter uncovered some of the methods and motives of the overseas IRS imposters who preyed on American fear of IRS. The other day the Wall Street Journal reported that Indian police have arrested the apparent ringleader of the scammers in Indian Police Arrest Man Allegedly Behind Tax Scam Call-Center Network. The same day as the WSJ article Accounting Today had a story about how Americans’ tax information is out there on the dark web, for sale and available for scammers seeking to file fake returns and access refunds.

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First, I will briefly discuss the call center scams. Most are familiar with them; as the WSJ reported, the scammers “received phone numbers and other details about U.S. taxpayers from a contact in the U.S. Call-center workers would make hundreds of calls, telling whoever answered they owed back taxes and risked financial ruin, humiliation and arrest if they didn’t pay immediately.”

The WSJ article discusses how the call center scammers were taking in about $150,000/ day. Indian authorities arrested the ringleader and seized his Audi R8 as evidence.

A DOJ indictment from last fall named the ringleader as one of the co-conspirators. The indictment discusses the IRS scam as well as a few other confidence scams that prey on the vulnerable and unsophisticated, including one where callers impersonating ICE agents threaten deportation unless the victim paid a fee.

These schemes suggest that the callers know something about how some Americans fear IRS and government in general. As I discussed last week in a brief post on a TIGTA review of IRS CI conduct in investigating structuring violations the IRS does not help itself when it fails to respect taxpayer rights when it investigates structuring violations. As the TIGTA report described, “when property owners were interviewed after the seizure, agents did not always identify themselves properly, did not explain the purpose of the interviews, did not advise property owners of any rights they might have, and told property owners they had committed a crime at the conclusion of the interviews.” This kind of behavior (and the publicity surrounding it) plants the seeds of fear.

Added to the mix of likely confusion and fear is the onset of private debt collection, an issue Keith has discussed and one that is likely to contribute to new opportunities for scamming Americans. The upshot is I suspect that while perhaps the Indian authorities have put one bad guy away, there are many more right behind him, and many future victims who are a mere phone call (or text) away.

On to the dark web. Wikipedia defines the dark web as “content that exists on darknets, overlay networks which use the public Internet but require specific software, configurations or authorization to access.” Last week Accounting Today in Tax refunds are selling cheap on the Dark Web discusses how there is a fully active market for sales of individuals’ W-2s. There is a sobering link to an IBM study outlining a 6,000 per cent increase in IRS scam emails over the past year, and how cybercriminals are selling W-2 information for $30, with an additional $20 charge for last year’s AGI, a necessary bit of information to allow a scammer to efile a return.

The Accounting Today story is terrific and I recommend a read; it has useful screenshots showing ads on the Dark Web and includes some new vocabulary that the fraudsters use to discuss the crimes. The piece ends with a reminder of how the fraudsters depend on people opening and responding to phishing emails and that “[n]o matter how enticing—or scary—the supposed offer or threat is in the supposed IRS letter, which will try to entice you into clicking on a link, or opening a file, resist, and forward the phishing attempt to the IRS at phishing@irs.gov.”

Good advice.

Leslie Book About Leslie Book

Professor Book is a Professor of Law at the Villanova University Charles Widger School of Law.

Comments

  1. Norman Diamond says:

    ‘[..] the scammers “received phone numbers and other details about U.S. taxpayers from a contact in the U.S. […]”‘

    Without mentioning which agency employs their contact in the US?

    I don’t think the Indian call centre leader is the ring leader. Some of us get calls and faxes that have return numbers in the US At least one US number actually used to be an IRS phone number before being handed over to scammers. I don’t know if the fax number in two faxes I received used to be an actual IRS number, but isn’t it interesting that the same number was still in business years after I presented the first one to the IRS and US Tax Court.

    (The reason for presenting it in Tax Court was to show that the matter of English-speaking identity thieves target victims in Japan isn’t paranoia, in case it wasn’t sufficient that identity theft has been big business in Japan for decades or centuries. By the way the IRS’s lawyer didn’t believe that the IRS used to put people’s social security numbers on the outsides of envelopes next to names and addresses. Luckily I only had to search three boxes of files to find the original envelope. It only had to be viewed by one thief when it was left out in the street instead of being delivered to me.)

    ‘there is a fully active market for sales of individuals’ W-2s.’

    There still appears to be one for 1099s too (even after some arrests) and 1042-S’s.

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