IRS scam targets financial professionals, too

Now some in the financial services industry, as well as some consumers, are being warned that they could get a call one day from a fake IRS agent seeking bank account information.

We’ve heard about the con artists who pretend to be from the Internal Revenue Service and demand immediate payment of money.

Now some in the financial services industry, as well as some consumers, are being warned that they could get a call one day from a fake IRS agent seeking bank account information.

The IRS has issued a fraud alert about scam artists who are contacting international financial institutions by using a ruse built around overseas bank accounts.

It’s an alert that could be especially important in Michigan given our close proximity to Canada.

The con artists are taking advantage of the need for financial institutions to comply with the Foreign Account Tax Compliance Act.

But the IRS warned that it is not requiring financial institutions to provide specific account holder identity information or financial account information over the phone, by fax or by e-mail.

Another clue of a scam: The IRS does not solicit registration passwords or similar confidential account access information relating to the Foreign Account Tax Compliance Act.

The act, which became law in 2010, has gotten more press as there’s continued efforts to combat tax evasion by those in the U.S. holding bank accounts and financial assets offshore.

For individuals, the key form to consider is Form 8938. Taxpayers with income in or from a foreign country must report the total value of their foreign assets if the value is above $50,000 at the end of the year or if the value of the assets exceeded $75,000 during the year.

“Penalties are stiff if these information forms aren’t filed,” said Mark Steber, chief tax officer for Jackson Hewitt Tax Service.

One might be subject to a $10,000 failure to file penalty and an additional penalty of up to $50,000 for continued failure to file after IRS notification, and a 40% penalty on an understatement of tax attributable to non-disclosed assets.

Other penalties also could apply, as well as possible criminal penalties.

Steber noted that many people do not understand the rules involving foreign accounts but they read major stories about crackdown in tax abuse.

“The rules are relatively new, penalties are large and very scary and there is much publicity on complying with the new rules,” Steber said.

And ID thieves take advantage of that fuzzy knowledge.

“Collecting foreign account information is ripe for abuse,” Steber said.

The IRS said it’s had reports of such phishing incidents involving multiple countries and continents.

The scam can be carried out via e-mail or websites that pretend to be legitimate contacts.

Financial institutions or their representatives that suspect that they are the subject of a phishing scam should report the matter to the Treasury Inspector General for Tax Administration at 800-366-4484. Or it’s possible to file such a report via a secure website. Seewww.treasury.gov and look for the link to report suspicious e-mail or suspected fraud.

Any suspicious e-mails that contain attachments or links in the message should not be opened and the e-mail should be forwarded tophishing@irs.gov.