Beware of bitcoin fake tax debts scam

Bitcoin and other cryptocurrencies are the latest in a long line of weapons that fraudsters are using to prey on the vulnerable.

The Australian Taxation Office is calling on accountants and tax agents to help combat fake tax debt scams involving cryptocurrencies such as bitcoin.

Accountants and tax agents are very good at telling clients what to do, but sometimes their most valuable advice comes from convincing clients to not do something.

A case in point is the Australian Taxation Office’s (ATO) plea for people to beware of scammers impersonating the ATO and demanding bitcoin as a form of payment for fake tax debts.

Your clients would be too clever to fall for that trick, right? Well, perhaps not.

“So far, we have seen over A$98,000 paid in bitcoin to scammers claiming fake ATO debts, usually via bitcoin ATM machines,” says the ATO’s assistant commissioner Kath Anderson.

Hang up on tax bitcoin scammers

This has prompted the ATO to work with tax and financial advisers to warn people not to get sucked in by callers threatening police or legal action if a supposed debt is not paid.

“The ATO will never ask for payment in bitcoin or any other cryptocurrency and we don’t accept payments via ATM machines,” Anderson says.

Her message for advisers and their clients is simple when rude and aggressive callers seek crypto payments: “Hang up, it won’t be the ATO.”

She adds that because cryptocurrencies operate in a virtual world, once the scammers receive payment it is virtually impossible to get it back.

Growing risk from bitcoin scams

Paul Drum FCPA, head of policy at CPA Australia, says bitcoin and other cryptocurrencies are the latest in a long line of weapons that fraudsters are using to prey on the vulnerable.

“It’s an additional tool in the scammers’ repertoire,” he says.

While the bitcoin scam involving the ATO has had a modest impact to date, CPA Australia believes the risk is inevitably going to rise given the increase in the number of businesses accepting payments by cryptocurrency.

According to CPA Australia’s 2017 Asia-Pacific Small Business Survey, a significant proportion of small businesses in Vietnam and Indonesia accept cryptocurrency payments.

As enterprises in other countries follow suit, there is the potential for the small number of rip-offs today to grow into a significant problem tomorrow.

“It’s tip-of-the-iceberg stuff when you think that bitcoin is just one of 3000 cryptocurrencies, and that number is predicted to rise to 5000 cryptocurrencies by the end of the year worldwide,” says Drum, who adds that tax agents should educate their clients to be vigilant and urge them to call them if they receive a dubious demand for payments.

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Tax agents should warn clients

Drum points out that payment of tax bills is typically done through “very traditional” options such as BPAY, myGov and epay, as well as via physical payments.

Clients should be alert to requests for any “exotic” payment options and act quickly to “take it up with your tax agent and get them to follow up because they’ll have your running balance account and know exactly where you are at financially”.

The ATO delivers regular education and awareness tools and advice aimed at protecting the community from threats such as impersonation scams, while there is also plenty of online material about such fraud and how to avoid it.

For its part, CPA Australia will address such scams at its series of Public Practice Conference events this year.

Sour note on demands for payment

The ATO is also urging accountants to warn clients about other versions of the fake tax debt scam.

Demands for payment via third-party bank accounts, iTunes cards or with a pre-paid Visa gift card are all too common.

Last year, taxpayers reported losing a total of almost A$2.4 million to fraudsters claiming to be from the Tax Office, including more than A$900,000 in iTunes payments.

Advisers should also school clients about email and SMS scams intended to gather personal and financial information that can be used to impersonate them. Such cons typically ask the recipient to click on a link and then update their details.

Anderson says there is no doubt that accountants, tax agents and other financial advisers have a crucial role to play to protect their clients in an era of ever-increasing cryptocurrency transactions.

Whether the payment method is via a cryptocurrency or another platform, threat-based impersonation scams continue to be an ongoing threat to the community.

“Unfortunately, it was inevitable that scammers would target cryptocurrency given its current popularity and anonymity,” she says.

What accountants should be telling their clients …

The ATO advises the following four actions to safeguard clients from scams.

1. Keep personal information safe and secure
Store personal data such as a tax file number or a birth certificate somewhere safe – for example, do not carry them around in a wallet or handbag or save them on a phone.

2. Don’t share too much on social media
Scammers can use information published on social networking sites to steal identities. It is also a good idea to make sure profiles are set to private, and to be cautious about which friend requests to accept.

3. Be suspicious of requests for personal information
Scammers will sometimes quote personal information to sound authentic, so if someone asks for personal information, consider the possibility that it may be a scam. To check if a call, email or SMS is from the ATO, call 1800 008 540 to confirm.

4. Know legitimate ways to make payments
Scammers often use threatening tactics to trick their victims into paying false debts in pre-paid gift cards or by sending money to non-ATO bank accounts. To check that a payment method is legitimate, visit ato.gov.au/howtopay

Read next: Bitcoin taxation: a global challenge for tax authorities


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