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Safeguarding Your IRS Payments: Defending Against Check Washing Fraud
In an era where financial scams are becoming increasingly sophisticated, protecting your IRS payments demands more awareness than it once did. Check washing fraud, a technique where thieves steal checks from the mail, erase crucial information, and manipulate the payee and amount, has seen a resurgence. Understanding exactly how this crime is committed is essential if you want to protect yourself and your loved ones. In this guide, we will also look at implementing preventive measures to secure your financial transactions.
What is Check Washing Fraud
Check washing is a multi-step process criminals use to steal money from unsuspecting victims. The scheme unfolds as follows:
1. Mail Theft: Criminals target checks in the mail, either from mailboxes or USPS collection boxes. This can involve individuals acting alone or as part of organized crime rings.
2. Chemical Alteration: Stolen checks undergo a chemical washing process that erases the payee information and amount, leaving the signature and paper intact. Alternatively, criminals may attempt to scratch off existing details.
3. Forgery: Once the check has been prepared, criminals then inscribe new information on the blank check, changing the name and amount at will.
4. Deposit and Withdrawal: The manipulated check is deposited into a bank account, either through traditional means or using mobile deposit services. Subsequently, the criminals swiftly withdraw the funds.
This process may involve different “actors” from the crime ring specializing in distinct roles, such as stealing, washing, or cashing checks, contributing to the scheme's complexity.
Mitigating Risks: Protective Measures
To shield yourself from becoming a victim of check washing fraud, consider implementing the following safeguards:
1. Embrace Electronic Transactions: Shift towards electronic bill pay, transfers, and peer-to-peer payment apps, minimizing reliance on physical checks.
2. Opt for Secure Writing Practices: Use black gel pens, known for ink that is challenging to wash off. Brands like Uni-Ball pens with Super Ink claim added protection against fraud.
3. Mail Safely: If mailing checks is unavoidable, drop them off at the post office to minimize theft risks. Avoid using USPS collection boxes, especially in less-traveled areas.
4. Mailbox Vigilance: Regularly retrieve mail from your mailbox, and sign up for Informed Delivery from USPS to monitor expected mail.
5. Travel Considerations: When traveling, request a USPS mail hold to safeguard your mail from potential theft during your absence.
6. Financial Oversight: Frequently review your checking account for unusual or unexpected withdrawals, promptly identifying any signs of unauthorized activity. If you see a suspicious transaction, contact your bank or credit union immediately for assistance.
Responding to Fraud: Taking Swift Action
If you suspect check theft or notice forged checks, take immediate action:
1. Contact Your Bank: As noted, report any incidents to your bank immediately, enabling them to take preventive measures such as putting a hold on the check.
2. File a Police Report: In case of deposited forged checks, file a police report and work closely with your bank. Reimbursement policies may vary, and investigations could extend over months.
3. Regulatory Intervention: If disputes persist, reach out to the bank's regulator for assistance. Utilize resources like HelpWithMyBank.gov for national banks and relevant links for credit unions and state-chartered banks.
4. Report the crime to the USPS.
Dealing with IRS Tax Obligations
Our office is here to help you navigate the outcome of financial fraud and the IRS. Below are some issues we need to resolve as we prepare to take action.
1. Assessing the Damage:
Examine your IRS payment obligations to determine the impact of the lost funds.
Identify the specific taxes owed and any associated penalties or interest.
2. Contacting the IRS:
We will reach out to the IRS immediately to report the situation.
Explain the circumstances surrounding the lost funds and inquire about potential relief options on your behalf.
3. Penalty Relief Programs:
In cases of financial hardship due to fraud, the IRS may offer penalty relief programs.
We will explore available options such as the First-Time Penalty Abatement or the Reasonable Cause Assistant.
4. Establishing a Payment Plan:
We will work with the IRS to establish a viable payment plan based on your current financial situation.
Discuss installment agreements or other arrangements to fulfill your tax obligations over time.
Beyond Check Washing: Monitoring Identity Theft
Recognizing that check thieves may exploit personal information, remain vigilant against identity theft:
1. Credit Monitoring: Regularly check your credit or use monitoring services with free alerts to swiftly detect any attempts to open credit accounts using your information.
2. Identity Theft Protection: Explore identity theft protection services offering financial and logistical assistance in case of identity restoration needs.
By staying informed and implementing these measures, you strengthen your defenses against check washing fraud and other financial threats, ensuring the security of your IRS payments. Don't let sophisticated scams compromise your financial well-being—take charge of your financial security today.
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Securities offered through PFS Investments Inc., member FINRA & SIPC. Investment advisory services may be offered through PFS Investments Inc. or, where applicable, through a separately registered investment adviser. Paul D. Diaz is an IRS Enrolled Agent & IRS Certifying Acceptance Agent and provides ITIN/W-7, tax preparation, tax resolution, and tax advisory services through THE TAX CUTTERY®, an independent firm. Tax services are not offered through PFS Investments Inc. or its affiliates and are solely the responsibility of THE TAX CUTTERY®. This message is not intended as an offer or solicitation in any jurisdiction where such offer or solicitation would be unauthorized. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results.
Paul D. Diaz, EA, MBA, has unlimited representation rights before the Internal Revenue Service.