The IRS has issued a consumer alert about an Internet scam in which consumers receive an e-mail informing them of a tax refund. The e-mail, claiming to be from the IRS, directs the consumer to a link that requests personal information, such as Social Security number and credit card information. The scheme is an attempt to trick the e-mail recipients into disclosing their personal and financial data. The practice is called "phishing" for information.

The information fraudulently obtained is then used to steal the taxpayer's identity and financial assets. Generally, identity thieves use someone's personal data to steal his or her financial accounts, run up charges on the victim's existing credit cards, apply for new loans, credit cards, services or benefits in the victim's name and even file fraudulent tax returns.

The bogus e-mail, which claims to come from "tax refunds@irs.gov," tells the recipient that he or she is eligible to receive a tax refund for a given amount. It then says that, to access a form for the tax refund, the recipient must use a link contained in the e-mail. The link then asks for personal and financial information.

The IRS does not ask for personal identifying or financial information via unsolicited e-mail. Additionally, taxpayers do not have to complete a special form to obtain a refund.

If you receive an unsolicited e-mail purporting to be from the IRS, take the following steps:

• Do not open any attachments to the e-mail, in case they contain malicious code that will infect your computer.
  
  
• Contact the IRS at 1-800-829-1040 to determine whether the IRS is trying to contact you about a tax refund.

The IRS has seen numerous attempts over the years to defraud the public and the federal government through a variety of schemes, including abusive tax avoidance transactions, identity theft, claims for slavery reparations, frivolous arguments and more. More information on these schemes may be found on the criminal enforcement page at IRS.gov.

...back to 1 December 2005

Further information:
IRS Warns of e-Mail Scam about Tax Refunds
Tax Scams/Consumer Alerts
Criminal Enforcement

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The Department of Justice has announced that a federal court in Boise, Idaho has permanently barred two companies and their owner from promoting an alleged employment tax-fraud scheme involving purported in-kind payments of milk to workers to avoid paying federal employment taxes.

The court order requires the defendants to provide the Justice Department with a list of their dairy-farm customers and those customers' employees, including names, addresses and Social Security or employer identification numbers.

According to the complaint filed by the Justice Department, the defendants helped dairy farms in Idaho, California, Arizona, and Oregon disguise cash wages paid to farm workers as purported in-kind payments of milk so as to avoid paying federal employment taxes. Under some limited circumstances, federal law exempts from tax-withholding in-kind payments of agricultural commodities for agricultural labor. The defendants allegedly prepared phony commodity statements that falsely reported that workers were paid in milk and arranged to have these statements distributed to workers in lieu of wage and earnings statements. The complaint described the defendants' actions as a "brazen tax-evasion scheme" that caused more than $12 million in employment tax and income tax losses.

The court's order bars the defendants from promoting their in-kind payment program and bars the corporate defendants from engaging in any payroll, employee-leasing or labor management services.

...back to 27 October 2005

Further information:
Court Bars "In-Kind Wage Payment" Tax Scheme

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