While Canadians are contacted every day by would-be fraud artists, there seems to be something about a communication from the tax authorities, whether real or fake, that makes people especially vulnerable. Perhaps it is the fact that most Canadians are unfamiliar with the workings of a system. Most of us only interact with the CRA once a year.
It’s also possible that we're apprehensive about the real (or rumoured) abilities of the CRA and the federal government to cause grief, and therefore suggestible. Whatever the reason, it’s often the case that even those who would normally be able to discern what they are being told, suspend their disbelief when dealing (by phone or by e-mail) with someone who they believe represents the CRA.
While tax scams are a year-round activity, such scams flourish during the spring and early summer. Tax returns are filed in the spring and the CRA then issues a Notice of Assessment to each tax filer. On occasion, the CRA will contact a taxpayer seeking clarification of income amounts reported or documentation of deductions or credits claimed on the annual return. Consequently, it wouldn’t necessarily strike taxpayers as unusual to receive, at this time of the year, a communication purporting to be from the CRA, with a message regarding that person’s taxes.
Generally, there are two ways in which fraud artists prey on taxpayers, In the first, the taxpayer is contacted by e-mail and advised that he or she is owed money by the federal government. In order to receive the money owed, the taxpayer must click on a link in that e-mail. The link leads, not to a federal government website, but to a “dummy” site closely resembling the actual CRA website. The taxpayer must then, in order to have his or her “refund” processed, provide personal and financial information which can then be used by the tax scammer.
The second approach, and one which has been used with great success over the past few years, is to falsely inform the taxpayer (this time, usually by telephone) that he or she owes money to the CRA and that immediate payment must be made. A failure to pay, the taxpayer is told, will mean seizure of his or her assets, cancellation of his or her passport and/or social insurance card or other government-issued identification, deportation, or imprisonment. Further, such payment must be made only by wire transfer or pre-paid credit card. This type of fraud has become so ubiquitous, in fact, that many businesses which provide money-transfer services post warnings on their premises to would-be users of the need to be aware of the fraud risk.
There are, in fact, several things about such a phone call that should alert the recipient to the fact that it’s not legitimate. First of all, if a taxpayer does owe money to the CRA, he or she will be first advised of that fact by mail and never by telephone – generally in his or her Notice of Assessment for a tax return filed. Second, the CRA would never suggest or require that a taxpayer send funds to the Agency by wire transfer or by using a prepaid credit card. Any payment of money owed to the CRA is made online, through the CRA website, through the taxpayer’s financial institution (in person or online), or by mailing a cheque to the Agency. Finally, any suggestion that the CRA would (or could) cancel a taxpayer’s passport or other government issued ID for failure to make payment is simply ludicrous.
There is almost no limit to the number and variety of scams and phishing attempts that are carried out using the CRA’s name and new ones, which appear frequently, are usually identified on the CRA website. Unfortunately, many such scams originate outside Canada, limiting the ability of the CRA and law enforcement authorities to monitor or stop them. For the most part, therefore, the onus will fall on individual taxpayers to protect themselves, through a healthy degree of caution and even skepticism.
The CRA suggest that, in order to avoid becoming a victim of such scams, taxpayers should keep the following general guidelines in mind.
The CRA will never:
When in doubt, a taxpayer should ask himself or herself the following:
Telephone scammers will often leave a voice mail with a phone number at which the taxpayer can reach them. Instead of calling that number, the taxpayer should call the CRA Individual Income Tax Enquiries line at 1-800-959-8281. Service agents at that line will be able to access the taxpayer’s tax records and provide information on whether the taxpayer does indeed owe any funds to the CRA. As well, taxpayers who receive what seems to be a suspicious communication should report that by e-mail to info@antifraudcentre.ca – or they can call the Canadian Anti-Fraud Centre at 1-888-495-8501.
If the worst has already happened, and the taxpayer has been scammed, the Anti-Fraud Center has the following advice.
Step 1: Gather all information about the fraud. This includes documents, receipts, and copies of emails and/or text messages.
Step 2: Report the incident to local law enforcement. This ensures that police in that jurisdiction are aware of what scams are targeting their residents and businesses. Keep a log of all your calls and record all file or occurrence numbers.
Step 3: Contact the Canadian Anti-Fraud Centre toll free at 1-888-495-8501 or through the Fraud Reporting System (FRS).
Step 4: Report the incident to the financial institution where the money was sent (e.g., money service business such as Western Union or MoneyGram, bank or credit union, credit card company, or internet payment service provider).
Step 5: Victims of identity fraud should place flags on all their accounts and report to both credit bureaus, Equifax and TransUnion.
Finally, the Centre also warns that victims of fraud are often targeted a second or third time with the promise of recovering money previously lost. Their advice is never to send money to recover money.
Ironically, the extent to which most individuals are now comfortable transacting their tax and financial affairs online or over the phone, and the speed and anonymity of such transactions has made it easier in many ways for fraud artists to succeed in their scam attempts. As ever, the best defence against becoming a victim of such fraud artists is by refusing to provide personal or financial information, and especially never to make any kind of payment, whether by phone, e-mail, or online, without first verifying the legitimacy of the request.