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March 2009

Tax-Time Scams

Tax time has arrived and so have the tax-related scams. Thieves are taking advantage of public confusion over the recent congressional debate over a second round of proposed federal “stimulus payments” to taxpayers. Certainly there has been substantial discussion of a 2009 stimulus payment—whether as a rebate check or as reduced withholding for Social Security and Medicare—for taxpayers whose gross income does not exceed $75,000 (single) and $150,000 (joint). This debate, of course, is part of a much larger and more complicated attempt by Congress to jumpstart our lagging economy; congressional action was still in the works at press time. However, this has not prevented thieves from attempting to take advantage of law-abiding taxpayers.

Making all of this more confusing is the interplay between the first stimulus payment and the proposed second payment. During the first round, taxpayers who report annual gross income for taxes payable in 2007 or 2008 that is less than $75,000 (single) and $150,000 (joint) are eligible for up to $1,200 for a joint return ($600 single) plus $300 per eligible child under the age of 17. A number of taxpayers reported 2007 gross income that is greater than the limits and either received a partial stimulus check or none at all. However, if their 2008 gross income is less than their 2007 gross income and falls within the income guidelines when they file their 2008 return, they will be eligible for some or all of the payment they missed in 2007.

Typical of our tax system, this is confusing stuff and is making consumers susceptible to thieves. For example, The Wall Street Journal reports that in one e-mail, the pitch was as follows: “After the last annual calculation of your fiscal activity, we have determined that you are eligible to receive a Stimulus Payment. Please submit the Stimulus Payment form in order to process it.”

You are then asked to download the form so that your request may be processed. The request looks official in part because it is signed, “Regards, Internal Revenue Service.” Downloading this form will only lead to trouble and it is most definitely not from the U.S. Internal Revenue Service (IRS). The IRS will base your stimulus payment on your written return and will use the direct deposit information you listed on your return. The IRS will not send an unsolicited e-mail to you. If this happens, your best defense is to delete the e-mail. Please note the Wisconsin Department of Revenue will also not send an unsolicited e-mail to you.

The Wisconsin Department of Agriculture, Trade & Consumer Protection and the Wisconsin Department of Revenue are also warning of a related scam. They report that taxpayers are receiving phone calls about the economic stimulus payments in which a caller states he or she is an IRS employee and requests your social security and bank account numbers because the IRS needs this information to “complete the processing of the taxpayer’s payment.” This is a scam. Once again, the IRS uses the information on your return and will not call you over the phone to get this information. The Wisconsin Department of Revenue also does not make such calls. If this should happen to you, your best defense is to hang up immediately.

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