As Tax Rebate Thieves Go on the Prowl, Credit Unions Man Consumer Defenses
WASHINGTON -- The upcoming tax rebate that will put an extra $300 to $1,200 in the hands of most Americans. And, while that sounds good to consumers, it also has become a golden opportunity for crooks. After all, the total going out to individuals is projected to be in the neighborhood of $100 billion, and the bad guys want a chunk.
Credit unions are helping the IRS alert people to the scams that have sprung up. They're also trying to make certain members who ordinarily don't need to file a federal income tax return submit the necessary paperwork that will put them in line for a rebate.
Michelle Lamishaw at the IRS noted that even though the rebates--officially called economic stimulus payments--won't start going out until May, the IRS has already seen newspaper accounts of phone calls and e-mails claiming to come from the IRS.
For example, an article in the Quincy, Mass., Patriot Ledger indicated some scammers are telling people they can have their rebate early if they provide their Social Security number or other information. Hang up, authorities urge.
In some phone calls, Lamishaw said, "the caller, claiming to be an IRS employee, told the target of the scam he was calling about the payment and the IRS needed the target's bank account number in order for the target to receive the check. When the target refused to give out his bank account number, the caller told him he could not receive a payment. Based on past experience, scammers do use current events, such as the California wildfires, as a hook for their scams. So the IRS expects to see scams involving the rebate."
Lamishaw's prediction seems to be upheld by
data from the IRS special e-mail site (firstname.lastname@example.org). The site was established two years ago to receive scam e-mails that claim to come from the IRS. When forwarded, the e-mail retains information that allows the IRS to trace the scam to its host server and get it shut down. To date the site has received more than 34,000 such e-mails, reporting more than 1,700 different scams.
The IRS emphasizes the agency will not contact taxpayers by phone or e-mail to discuss the economic stimulus payments or to collect information--especially bank or credit union account numbers or Social Security numbers. The only way to get a payment is to file a 2007 tax year federal return.
Another site (www.irs.gov), Lamishaw added, has a lot of information on the economic stimulus payment.
Many credit union leagues and individual credit unions are already advising members about the economic stimulus program, including the importance of filing a tax return and the need to be wary of scams.
When Credit Union Times surfed the Internet, it didn't take long to discover information posted on the Web sites of credit unions such as Central Jersey Federal Credit Union, Cyprus Credit Union in Utah, Sabine Federal Credit Union, NASCOGA Credit Union in Texas and others.
At Marion School Employees Credit Union in Indiana, Financial Consultant Bonnie Thompson at the credit union's CUSO has become involved. She not only saw newspaper articles about the rebates but noticed an ad from a tax preparer offering to file the necessary return for $35.
"The CUSO that I manage offers electronic filing to our members," Thompson said. "When I heard about the economic stimulus payments, and the fact that in order to get one you need to file a tax return, I became concerned about our members who do not normally do so, and how we could alert and assist them."
"I realized these are typically low-income people," Thompson said. "I went on the IRS site to see how difficult it would be. It was so simple, I couldn't see how someone could charge $35. I thought it was something we could do and not charge for."
The same personnel who normally do the filing have been training to assist members in completing a 1040A at no charge. Employees have been asked to be on the lookout for members who may not ordinarily have to file tax returns. That could include members who personally deposit or have direct deposit of Social Security, disability or veteran's benefits.
Even before an article appeared in the MSECU newsletter, Thompson received calls from staff members who were already sitting down with members to help them file a tax return so they could receive the rebates. Employees also have in mind potential rebate recipients they want to phone.
The Texas Credit Union League has relayed to member credit unions a Texas State Attorney General's scam warning. The Georgia Credit Union Affiliates has provided credit unions with a brief article they can feature in their newsletters or on their Web sites.
When Georgia credit union representatives met with Congressman John Lewis (D-Ga.) during CUNA's Governmental Affairs Conference, he raised the topic of educating consumers about the importance of the stimulus payments and how to obtain them. He stressed that people do not have to pay to receive the check, and companies charging fees are simply ripping off consumers.
Although not heavily publicized, the economic stimulus package has another aspect that could affect credit unions. Loan limits for FHA, Fannie Mae and Freddie Mac loans have been increased. FHA can now provide government-backed mortgage loans for as much as $725,000. That's more than double the current $362,000 limit. Fannie Mae and Freddie Mac will be able to buy mortgages as large as $625,000.
Those higher loan limits, the backers hope, will increase the buyer pool and boost home sales, helping cure the current housing downturn. The National Association of Realtors, which lobbied for the increase in loan limits, calculates borrowers could save $3,000 to $5,000 a year in interest payments, and as many as 210,000 foreclosures could be prevented by refinancing at a lower rate.