For many the annual filing of income taxes is scary enough in itself, but the idea that someone might not only steal your information but also file your taxes is maddening. But that's just what has happened to some taxpayers. Brian Krebs, a well known blogger on internet security issues, is reporting that he has discovered: a ring of tax thieves.
Krebs first discovered the problem when he found an online tool that he calls "crimeware." The interface, picture above, lists the names of employees, job titles and transfer amounts, obtained from W2s. The group of criminals using this tool breached the internet HR department of a large company to get enough data to file the fraudulent returns. The breach occurred because the criminals were able to exploit the company's connection to a third-party payroll provider, Ultimate Software, by stealing the company's HR manager's credentials. Over the last few years there has been an increasing pattern of security breaches occurring through the use of cloud provided services.Tax returns were then filed using H&R Block free filing software and the refunds were diverted to prepaid American Express cards at "drop" locations.
Victims of a scam like this are in a uniquely difficult spot. As a crime, it may take a while to uncover, until you file your own taxes and no refund appears. This begins a nightmare of filing forms and making complaints to everyone from the IRS to the Federal Trade Commission and the FBI. Nor is the problem likely to disappear. Last year the IRS reported $4 in tax refund thefts, according to Krebs.
If you believe that you have been the victim of this kind of theft, the IRS has an Identity Protection Unit that can secure your tax account. You can also enable a pin number and take other security measures proactively to help secure your identity by clicking this link.
The scariest part of this, according to Krebs is that it appears that the crimeware he found may be licensed for sale.