Tax Scam Targets Military Families

You’re the lonely wife of a soldier stationed in Iraq . You’re doing okay, but money is tight, and the kids miss Daddy. To make matters worse, it’s tax time. HE always did the taxes before … but this time it’s your job.

They call it the EZ1040, but the only easy thing about it is the name. The tax preparer down the street was just your neighbor a week ago, and you know she doesn’t know much more about it that you do. You don’t have enough money to pay a tax accountant, so eventually you find a way to do it on your computer.

But the company that wrote the tax program doesn’t know the military family fine points, so they’re not in the program; consequently, you know your attempt will be half-assed at best.

You have completed the first draft, and are comparing your receipts to the program list when the phone rings. It’s a guy from the IRS – at least, that’s what he says. He is calling to tell you about a military family refund to which you are entitled – a $4,000 refund. He explains that the processing of these refunds has become so expensive for the Pentagon, which is the ultimate source for the special refunds, that the IRS is collecting a $42 fee to cover this processing cost.

If you wish, you can mail in your check, but, obviously, this will delay the refund for however long it takes to process the check. Wouldn’t you rather get the refund on its way right now by paying the fee with your credit card over the phone?

Right about now, that $4,000 is looking pretty good. Sure, it could be a rip-off, but this caller supplies you with an impressive list of names and numbers to back up his story. Even a toll-free call-back number to the IRS. If they can process the payment this afternoon, he says, the refund can be in the mail today, and you might have it in your hands before the weekend.

So you give him your credit card number and authorize the $42 charge.

The following afternoon you stop at the gas station to fill up. But the pump pay station won’t take your card. It refers you to the attendant. He runs the card manually, but it is rejected. You are certain you are still below your limit – not by very much, but enough to pay for the gas. You pay with your remaining cash and drive home.

When you get home you call the credit card company. They tell you that your card is way overdrawn, caused by several purchases from the previous afternoon. That’s when you figure it out.

Fortunately, there wasn’t much left on your card for the con artists to take, and besides, your card company protects you for fraudulent charges over $50. Your friend two houses down the street was not so lucky. She gave the scammers her check card number. They cleaned out her checking account: $6,000.

A variation of this scam against the families of our military fighting men and women arrives by e-mail, seemingly from the IRS. The official sounding e-mail directs the reader to a website through a live link where the reader is then instructed to fill out a form that asks for a lot of detailed personal information. The form appears entirely authentic, even to the point that it is careful to protect private information with a high level secure socket layer (SSL) encryption system.

FAQs (frequently asked questions) linked to the questionnaire fully explain how the information will be used by the IRS, and caution the reader to be sure the SSL system is activated (the little padlock at the bottom of the page, and the “s” following the “http” in the address line).

Of course, the collected information is immediately used to empty the victims’ checking and savings accounts, to max their credit cards, and even to steal their identities.

Keep in mind that these scams are perpetrated against the spouse (usually the wife) of junior enlisted members stationed overseas, especially in the war zone.

IRS spokesman Bill Barksdale says, “What we’re trying to do is protect taxpayers from financial predators who are out there finding creative ways to steal from people. In this case, it’s not hard for these identity thieves to tell that lots of military folks are still deployed and, in many cases, their loved ones are left behind to figure out and finish the taxes.”

According to Barksdale, the IRS wants to get word of these scams to military families before more damage is done. He describes three real ways the IRS grants an advantage to military families:

* Deferment of an existing payment arrangement.

* Suspension of a due date for filing paperwork.

* Forgiveness of a tax debt if you are injured or killed while in a combat zone.

Details on each of these are available at the IRS website under Armed Forces Tax Benefits or in IRS Publication 3, Armed Forces Tax Guide.

Part of me wonders how it is possible for savvy people to fall for these tax related scams. Another part of me understands only too clearly (because I was right there myself in an earlier life), just how completely overwhelmed junior enlisted members and their families can become with just the exigencies of surviving from day to day. The promise of an extra $4,000 can seem like a gift from heaven.

I would like to reserve a special place on point in a suicide mission for the scum who perpetrate these scams.

Anyone who has been contacted in connection with either of the scams or a similar one should report the incident to (800) 366-4484. Complaints may also be faxed to (202) 927-7018 or mailed to TIGTA Hotline, P.O. Box 589, Ben Franklin Station, Washington, D.C. 20044-0589.

Robert G. Williscroft is DefenseWatch Navy Editor