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Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Monday, July 18, 2016


The American Institute of Certified Public Accountants (AICCPA) this week suggested a letter to mail to all accounting firm clients with suggestions for protecting you and your family from identity theft.  The issue hits close to home since my daughter was a victim of identity theft last year.  We did not discover the theft until we tried to file her 2014 income tax return.  The Internal Revenue Service (IRS) promptly notified us that she had already filed her tax return.  What to do?  First, call the police department and report the theft.  File form 14039 (Identity Theft Affidavit) with the IRS. If you need specialized assistance, call the IRS at 800-908-4490. The IRS does not accept an electronic return when you are a victim of identity fraud.  Instead, the old-fashioned paper return is required.  My daughter has yet to receive her refund.  Per the IRS it might be as long as six months.   

The Government Accounting Office (GAO) estimates that for 2013 fraudulent tax returns obtained about $5.8 billion and affected 2.4 million US taxpayers.  That number is increasing.  In a recent seminar I attended on identity theft for professional tax practioners the moderator asked the audience how many had clients that were victims of identity theft.  The show of hands was unanimous.  All had clients that were victims.

The AICPA recommended the following safeguards:

·         Secure private personal information.  Safeguard family names and birthdays, account numbers, passwords, and especially Social Security Numbers. Carefully consider all requests to provide your Social Security number before giving it out.  Do not carry your social security card in your purse or wallet. Shred unneeded documents that contain personal information, including junk mail solicitations.

·          Monitor personal information shared on social media.  Cybercriminals methodically gather data from online sources, including commonly used identifiers such as birthdate, maiden name, pet names, hometown, significant other, and children’s information.  Be cautious with who you communicate with online and be selective before accepting electronic invitations from people you do not know or recognize.  Separate what you post publically and from what you post with your personal contacts.  Do not post personal and family data.     

·         Secure your computer.  Use current version of antivirus, malware protection, and firewalls and update these programs frequently.  Consider having this software updated automatically, as well as using separate computers for business and finances than you do for social media and personal matters. Use strong passwords and change them frequently.

·         Beware of impersonators.  Criminals use sophisticated computer technology, such as dialers and automated questions, to contact thousands of targets daily.  Do not provide personal information to callers you do not know.   Watch out if a caller requests you verify personal information. Ask questions; their telephone number, name of their supervisor, email address, mailing address, their website.  The IRS never initiates contact by telephone.  They contact you using USPS. 

·         Unsolicited emails and phishing swindles. Do not open attachments or electronic links unless you know the sender.  Internet sites should they are encrypted.  Always be aware of entering sensitive data.  Forward emails received from IRS impersonators to  The IRS never initiates contact by email, text message, or social media channels. 

·         Monitor your personal information.  Review your bank and credit card statements often.

·         Electronic transmission of financial information.  Do not send sensitive tax or personal information via unsecured email, even information transmitted to CPAs, bankers, and/or financial advisors.  A secure portal, encrypted email or physical mailing of sensitive information is necessary. 

·         Order your free annual credit report.  Call 877-322-8228 or go to to request your report and search for creditors you do not know.  Choose to use only the last four digits of your Social Security number on your report.  Consider placing a credit card freeze on your account so only approved creditors can access your file. 

Another swindle becoming quite popular is the "Grandparents scam”.  In the conference I attended, one person in the audience related her story of her parents being a victim.  A swindler called her parents, identified by name their Grandson, identified himself as their Grandson’s good friend.  The Grandparents   recognized the name of their Grandson’s friend.  The caller said they were traveling in Mexico and their Grandson is in jail and needs bail money.  "Please don’t call our parents, the friend pleads!”  The Grandparents wired $8,500 to the caller.  The person relating the story stated, "Why my parents didn’t call me I’ll never know!”  The money is lost and not recoverable.

 The reality is your personal data is already at risk everywhere.  However, following the above suggestions reduces the likelihood of becoming an identity theft victim.  The main thing however, just be cognizant and aware, think about why someone wants your information. Maybe, disclosure not necessary.  

Tags:  accounting  fraud  identity theft  IRS  tax 

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Fraud: Does Size Matter?

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Friday, June 17, 2016


Henrique Haruki Cavalcante, commented in the General Forum of the Association of Certified Fraud Examiners (ACFE) an article titled "Topic:  Should I be worried about fraud in my (small) business?”  Henrique is an attorney with the Corporate and Bankruptcy firm of Machado Gobbo Advogados.  Henrique analyzed the recently released ACFE 2016 Global Fraud Report.  He concluded that organizations of different sizes tend to have different fraud risks.  For example, corruption is more prevalent in larger organizations, whereas check tampering, skimming, payroll, and cash larceny schemes are twice as common in small organizations.  The loss suffered by small business (less than 100 employees) was the same as the big boys. Size really does not matter – it is the way it is done that counts.

Why?  Small business owners do not give much thought on implementing anti-fraud controls in their organizations, such as adopting internal controls and policies, or establishing a hotline for anonymous whistleblower calls.  The owners do not believe a long-time and trusted employee will steal from them.  With fraud controls implemented, fraud losses are reduced as much as 54% and detected 50% faster.  The most effective control is a hotline.  It accounts for nearly 50% of frauds detected.

Fraud is not prejudiced.  It can impact any size of company.  

Tags:  business owner  fraud  small business 

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Identity Thieves May Be Targeting Your Employees

Posted By Kenyatta Turner, LegalShield Independent Associate, Monday, May 16, 2016

Wednesday, April 27, 2016

By Erin Stubing


Most corporate managers are familiar with the scam involving a thief sending a fake bill to a company’s accounts payable department, hoping that the accounting clerk would simply pay the bill without verifying its legitimacy. Thieves can use this simple scam to great effect, often tricking employees into sending money to the fraudster. 

However, the tactics used by data and identity thieves have evolved. Thieves are now targeting employees for bigger payments, as well as sensitive employee data. The thieves’ best ploys look very legitimate and play on the employee’s desire (and requirement) to answer a company executive quickly and with full cooperation. A common scam involves obtaining W-2 data by tricking an employee into thinking the CEO has requested it. This, of course, makes your employee vulnerable to having their identity stolen. 

Tax- or wage-related fraud was the leading form of reported identity theft in 2015, comprising 45% of all consumer complaints reported to the Federal Trade Commission (link opens PDF). W-2 data has been a popular target lately and it is likely due to the ease with which tax return fraud is perpetrated. Forty-five percent of all of the identity theft claims collected by the Federal Trade Commission in 2015 related to tax- or wage-fraud. In fact, there was a 47% increase in the number of identity theft complaints received by the FTC in 2015, and they stated that tax- or wage-fraud was responsible for the bulk of that increase.

To get an idea about how rampant the W-2 scheme is, just perform an internet search on “phishing scams W-2” in order to find multiple news reports about businesses that experienced a W-2 phishing scam.  All types of businesses have been affected: a grocery store chain, financial firms, health care providers, entertainment companies, universities, technology companies and even a concrete supply company.

Human resources and other corporate managers would do well to be vigilant, to help protect their employees' personal information. LegalShield's identity theft partner Kroll has prepared a flyer that outlines how employers can help protect their workers. Download it and share it with your managers!

For more information about LegalShield or IDShield for yourself, your family, your business, or your employees, please contact Kenyatta Turner, Independent Associate at 602-367-1069 or  Worry Less...Live More!

Tags:  data breach  employee benefits  fraud  human resources  identity theft  kroll  phishing scams  small business  w2 

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Fraudster Ticks - Those Sly Devils

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Wednesday, May 4, 2016

Was that really the ‘Wrong Number’? Have you ever called your bank and received a recording to enter your account number, then to enter your account passcode, then your date of birth to verify your account, followed by the last 4 digits of your social security number… and then the recording goes blank? If so you have been hacked. The fraudster really does not need all of that information. The first two – account number and any of the other information will allow a fraudster enough information to hack your account. How do the thieves do it?

Here is an example. If you Google the customer service number for say Wells Fargo Bank, you will get a number 800-869-3557. Fraudsters will buy up numbers that are very similar to the customer number, say 800 -869-3555 – easy enough to misdial the number. The scoundrels buy up numbers that are the same except for one digit. When you call the number, you get a recording asking for personal information.
A variation of the swindle. You receive a call from your bank telling you there is a problem with your account instructing you to call a certain number. That number could be a call to the thief. I am using the term ‘bank’, but it applies also to credit cards and for that matter the Internal Revenue Service.

How do you avoid the swindle? First, call the number on the back of your bank or credit card. Be sure of the website where you get the customer service number. These are the tips from the May/June issue of FRAUD Magazine published by the Association of Certified Fraud Examiners. The article also noted as I have mentioned before, IRS swindles are on the rise despite efforts and advertising by the IRS of the frauds perpetuated.

There has been a 400% increase in IRS fraud activity. Just note – the IRS will not call or email you. All correspondence will come by way of the US Postal Service.

Tags:  banks  credit  fraud  IRS  small business 

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Cost of Fraud

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Thursday, March 31, 2016

March 30, 2016, the Association of Certified Fraud Examiners, released its Report to the Nations on Occupational Fraud and Abuse.  Occupational fraud is defined as Employee Fraud through misuse of their position for personal enrichment.  It could involve embezzlement, fraudulent financial statements, and asset appropriation for personal use, collusion with vendors for kickbacks or any number of imaginative schemes.

With the report was a summary of the cost of fraud. Some highlights:

  • A typical organization loses 5% of its revenue
  • The median loss is $150,000
  • Total loss from fraud is $6.3 billion
  • Over 23% lost $1 million

Type of fraud:

  • Asset misappropriation loss    $125,000
  • Corruption loss                        $200,000
  • Financial statement fraud      $975,000

The people committing the fraud:

  • Employee fraud           $65,000
  • Manager                     $175,000
  • Executive or owner      $703,000

Number of people involved in fraud event:

  • One person                 $65,000
  • Two people                 $150,000
  • Three people               $294,000
  • Five or more              $633,000


Organizations that do not have fraud controls in place suffer twice as much fraud as those that have fraud controls.  Fraud amounts on companies with less than 100 employees had the same as that incurred by larger companies; however, the fraud loss on small business had a much greater impact on the organization.  Most fraud was uncovered through tips and companies with hotlines.  The longer a fraud lasts the greater the financial loss.  Fraud loss on privately owned companies is greater than on public companies. Most fraud loss is not recovered. 


Prevent fraud before it happens.

Tags:  Accounting  employees  fraud  management  small business 

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Personal IRS Identity Theft Experience

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Wednesday, March 30, 2016

In my post of March 11, 2016, “IDENTITY THEFT KINGPEN CAUGHT BECAUSE HE FLUNKED GEOGRAPHY”, I mentioned identity theft was becoming personal.  My daughters’ electronically filed tax return was rejected since someone had already filed a tax return using her social security number.   The solution was to file a paper tax return with the IRS.  In my post, I said to ‘stay tuned for further developments’.

 Monday, March 28, my daughter received a letter from the IRS.  The letter contained instructions to go to a website and answer some personal questions, or call a specific number of the IRS.  She first went to the website and answered some specific questions. One of the questions was the birthdate of a former sister-in-law of her husband.  Another was a question about different addresses.  After answering the website questions, she was then directed to call a specific IRS number.  She called and was placed on hold for an hour.  The fraud department of the IRS is shorthanded and very busy.

Finally, after an hour she was able to talk to an IRS representative.  The representative stated the fraudulent tax return filed had been flagged since it did not fit the profile of her previously filed tax returns.  “The IRS is getting smarter because of the amount of fraudulent tax returns being filed.  We now track the trends of taxpayers.”  After proving her identity, she was told to expect her refund in about six weeks, as opposed to the 10 days it normally takes for an electronically filed tax return. She was also told to expect a letter from the IRS advising her of other action to take, such as contacting the Social Security Administration, Credit Bureaus, and other action to take.  She will also receive a specific pin number to use when filing future tax returns.  


Tags:  accountants  fraud  identity protection  taxes 

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IRS Consumer Alert: Scammers Change Tactics

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Monday, March 14, 2016


March 14, 2014, Internal Revenue Service Alert, Newsletter IR-2016-40

This alert came across my desk this morning.  I think it is too important not to pass on.  The gist of the article is that identity thieves have new tactics to obtain your personal financial information. 

The swindle is an aggressive and threatening telephone call from criminals posing as IRS agents to verify your tax information.  The fraudster states they have your tax return and want to verify your social security number, bank numbers, or credit card information.  Of interest:  IRS Commissioner John Koskinen personally received one of these calls. 

The swindlers will provide fake titles, fake badge numbers, and provide some personal information to make it look like the call is a legitimate telephone call.  They will be persistent, demanding, and attempt to bully you into paying a bogus tax bill.  They will insist on your sending cash, through a prepaid debit card or wire transfer.  There has been a 400% increase in phishing and in bogus calls. 

Don’t be fooled.  The IRS will not call or email you to verify information!  Hang-up immediately.  Do not respond to the email.  If in doubt call the IRS at 800-829-1040.  You can also post details of the call to  this IRS site:  Alternatively, call 800-36-4484.  

Tags:  fraud  swindle  taxes 

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