Beware of tax scams: How to make sure you don’t get fleeced

Scams involving tax are not uncommon. They surface regularly. The scams range from the very basic to the quite sophisticated. People and businesses need to be on their toes not to be fooled by the scammers.

Most recently, NSW Fair Trading Minister Stuart Ayres said Fair Trading had received a report of a scam letter offering landlords living overseas the opportunity to claim a tax exemption on rental income.

He said the letter advises agencies managing landlords to forward forms to them to complete and return to the scammers. The forms require detailed personal information as well as photocopies of passports and mortgage account numbers. The covering letter in the scam email is badly written with numerous errors of grammar and spelling (this is not uncommon).

The letters aim to harvest details from real estate agents about Australian properties they manage on behalf of non-residents. The scammers may then seek to assume the identities of the non-residents and sell their Australian properties without the real owners' knowledge.

Ayres said Fair Trading had issued a warning about the same scam in July last year after it was reported by a real estate agent in Lennox Head. The ATO confirmed the scam to Fair Trading and that identical fake Her Majesty’s Revenue and Customs letters had been sent to real estate agents in the United Kingdom since at least March 2012, he said.

The scam letter may also feature fake ATO branding, as well as branding from other revenue jurisdictions (e.g. from HMRC in the UK). Ayres said these types of widely circulated scams are regularly sent to other international jurisdictions and the perpetrators often fail to change all details. A similar scam was identified in Western Australia in 2012.

The HMRC and ATO signature on the scam letters is identical and in some places in the ATO letter, the scammers have failed to replace the HMRC references, he said.

ATO Chief Technology Officer Todd Heather said the ATO's brand was often employed in scams due to the Tax Office's intensive interaction with the community and their willingness to comply with requests from the ATO. “Scammers are relying on more sophisticated methods to trick people into handing over their financial or personal contact details,” he said.

The scam flagged by Fair Trading, as with many others reported to the ATO, asks people for their personal details so they can likely commit identity theft and other types of fraud. Heather said the ATO has seen this scam over the past two years and have dealt with it by informing real estate industry associations and asking them to warn their members.

In 2013 alone, the ATO received almost 50,000 reports from the public about ATO branded scams.

To avoid being scammed, NSW Fair Trading offers some sensible advice:

• Don't respond to offers, deals or requests for your personal details. Stop. Take time to independently check the request or offer.

• Never send money or give credit card, account or other personal details to anyone who makes unsolicited offers or requests for your information.

• Don't rely on glowing testimonials: find solid evidence from independent sources (not those provided with the offer).

• Never respond to out of the blue requests for your personal details.

• Always type in the address of the website of a bank, business or authority you are interested in to ensure you are logging onto the genuine website.

• Don't open unsolicited emails.

Regularly updated information on tax-related scams and online security is available on the ATO website. 

Terry Hayes is the editor-in-chief of tax news reporting at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.

This article first appeared on SmartCompany.