Tags: fraud | alert | payroll | direct | deposit | w-2 | email

Fraud Alert! Beware of Payroll Direct Deposit, W-2 Email Scams

Fraud Alert! Beware of Payroll Direct Deposit, W-2 Email Scams
(Marko Bukorovic/Dreamstime)

By    |   Tuesday, 16 April 2019 05:00 PM

The IRS has identified an uptick in two email phishing scams. One scam targets companies that use direct deposit strategies for their company payroll. The other is pointed at the Form W-2 information gathered by companies on their employees. So you don’t get rolled by these scams, I address each of them in turn.

The Payroll Scam

Under the payroll scam, the emailer impersonates a company employee. An email is sent to a company executive or to the company’s payroll or human resources department. The email purports to be from a legitimate employee. The email asks company authorities to change the bank account to which the “employee’s” pay check is deposited. The “employee” provides a new bank name, account number and routing number. However, the account is actually owned by the thief, not a legitimate company employee. If the scam works, an employee can lose one or two pay checks before the fraud is discovered.

The W-2 Scam

The W-2 scam has been in operation for years. This scam involves an emailer impersonating a company executive or other person in authority within the company. The email is directed at the payroll or human resources department. The emailer requests a list of the organization’s most recent Forms W-2 covering all of its employees. W-2 information contains a person’s name, address and social security number, along with the gross wages and tax withholdings for a given year. With this information, the thief files fraudulent tax returns seeking refunds based on the W-2 data. The refunds are directed to a bank account that the thief controls. If the fraudulent return is filed before the citizen files a legitimate return, tax it will take months to sort out the fraud and to recover one’s legitimate tax refund.

What the Emails Look Like

The following is an example of an email working the W-2 scam. This is an email that was reported to the IRS. The brackets indicate where actual sensitive information was removed. Note that the grammar and syntax errors are as shown in the original emails.

From: [REMOVED] Sent: Monday, February 10, 2019 [REMOVED] To: [REMOVED] Subject: (no subject) Hello [REMOVED], I changed my bank and I will like my paycheck DD details changed. Do you think this change be effective for the next pay date? [REMOVED] Sent from my iPhone

Note that a very common “tell” in all scam emails is that they are generally rife grammatical and spelling mistakes, as well as poor syntax and punctuation. They usually reek of having been written by someone with only a basic command of English.

How to Report Scam Emails

While most of these scam operations are centered offshore, that’s not always true. In recent years, the IRS and FBI have broken up a number of domestically based fraud operations. For that reason, you should report any scam emails that you run across.

Forward suspected scam emails to the FBI’s Internal Crime Complaint Center (IC3) here: www.ic3.gov. Tax professionals and others should also report tax-related phishing emails directly to the IRS at phishing@irs.gov. This account is monitored regularly by IRS cyber security professionals.

The IRS has a separate email set up for employers to report scam emails involving Form W-2 specifically. Employers concerned about potential W-2 email scams, or who may have actually been scammed by one, should report the event to the IRS at dataloss@irs.gov.

Employers can also get more information on the reporting process and what do to if they were scammed by going to Form W-2/SSN Data Theft: Information for Businesses and Payroll Service Providers.

Practice Vigilance

I encourage all businesses to carefully review their cyber security procedures. Make sure you have systems in place to protect your data as much as possible from these kinds of attacks. It seems every day that goes by there is some kind of new scam that cyber thieves are using to target your data.

Dan Pilla is a tax litigation specialist with more than 40 years of experience helping people solve their IRS problems. He’s written 15 books, dozens of research reports and more than 1,100 articles on taxpayers’ rights issues, tax policy and administration, and IRS problems resolution. For more information, see: www.danpillabooks.com, and www.taxhelponline.com.

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It seems every day that goes by there is some kind of new scam that cyber thieves are using to target your data.
fraud, alert, payroll, direct, deposit, w-2, email, scams
Tuesday, 16 April 2019 05:00 PM
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