IRS's CP-2000 E-Mail Scams - Never in Dubai - Common in Canada & the UK

Abstract

On September 22, 2016 the Internal Revenue Service (IRS) and its Security Summit partners issued an alert to taxpayers and tax professionals to be on guard against fake e-mails purporting to contain a tax bill related to the Affordable Care Act. Surprisingly, this e-mail scam works. It really should not.

Modern technology is facilitating many contemporary tax scams. In recent years the US has seen false (refund) return scams, phone scammers impersonation IRS agents, and now e-mail scams with fraudulent CP-2000 notices attached to a demand for payment. The same phone and e-mail frauds have appeared in both Canada and the UK. The timing of the Canadian and UK frauds suggest a migration of the phone fraud from the US to the UK and Canada. That is the analysis of the UK’s Action Fraud Agency, part of the National Fraud Intelligence Bureau (NFIB) within the City of London Police Department.

The Indian government has begun an enforcement action against a number of call centers outside Mumbai related to the IRS impersonation phone scam. If past patterns prevail one might expect that closing the five call centers identified in the HGlobal indictment would only mean that other call centers would take up the business, and the fraud would continue. The same frauds, from the same Indian call centers also appear to be behind a phone fraud up-tick in Australia, and New Zealand. Following the same pattern, Irish phone frauds recently morphed into e-mail scams purportedly coming from Irish Revenue, which the Irish believe migrated into Ireland from the UK.

This is like a game of “whack-a-mole.” When a tax scam gets put down in one area we tend to see both: (a) a migration of the fraud to other jurisdictions (the US phone scam’s migration to Canada and the UK), and (b) a domestic mutation of the fraud (the US phone scam morph into the CP-2000 e-mail scam.) New scams pop up whenever old scams are put down.

There are lessons to be learned. This paper focuses on the new e-mail scams, a mutation of frightening potential. It is a technology-based scam, and it has the capability to eclipse all the older scams. It needs to be taken very seriously.

A solution is available. Government technology in the UAE would prevent it. Dubai would help its citizens identify and bock this scam with confidence.

Keywords: Phone Scam, False Return Scam, Email Scam, IRS, Dubai, India, Technology-Assisted Fraud, HGlobal, Affordable Care Act, CP-2000

JEL Classification: F10, K10, K14, K34, K39