Finance

IRS flagged 1M tax returns for identity

Published

2 years ago

May 17, 2023

The IRS flagged more than 1 million tax returns for potential identity theft during the 2023 tax season, according to the U.S. Department of the Treasury, signaling that such fraud continues to be a pervasive problem for taxpayers.

Tax-related identity theft occurs when criminals use a taxpayer’s personal information to file a return in their name to claim their federal tax refund.

The IRS identified nearly 1.1 million tax returns as potentially fraudulent as of March 2, according to a Treasury report issued to the public Tuesday that analyzed data partway through the filing season. The associated refunds were worth about $6.3 billion.

The IRS had confirmed 12,617 of the tax returns were fraudulent as of the same date in March, Treasury reported. That figure is up from 9,626 tax returns at the same time in 2022.

Tax-related identity theft has been a problem since about 2004-05, and it “only got worse” since then, said Nina Olson, executive director and founder of the Center for Taxpayer Rights.

“It went from being a one-off [thief] ripping off someone’s Social Security number to a whole scheme and organized crime,” Olson said.

Identity theft was the most prevalent type of fraud that consumers reported to the Federal Trade Commission in 2022. A report issued Wednesday by the Identity Theft Resource Center found that identity crime declined in 2022, but only marginally from the all-time high hit in 2021.

The IRS increased the number of filters it uses to identify potentially fraudulent tax returns since the 2022 tax season. The agency used 236 filters during the recent tax season, compared with 168 filters last year, Treasury said.

IRS plans $80 billion overhaul: Plan to crack down on closing gap of uncollected taxes

Tax returns identified as fraudulent by these IRS filters are held during processing until the IRS can verify the taxpayer’s identity.

“They’re trying to crack down … to make sure you’re [the one] actually filing,” said Dan Herron, a certified public accountant and certified financial planner based in San Luis Obispo, California.

Sometimes, the system inadvertently catches returns that aren’t fraudulent, though.

One of Herron’s new clients had been filing a paper tax return every year with a different accountant but filed an electronic return in 2023. The client received an IRS notice in the mail saying that the return had been flagged for fraud. The client had to contact the agency to verify their identity — delaying the issuance of a tax refund by several weeks, Herron said.

“It’s not a perfect system, but it’s going in the right direction,” Herron, founder of Elemental Wealth Advisors, said of the IRS systems.

How to protect yourself from tax-related identity theft

Blue eyed man, wearing a black sweatshirt with hood and a black balaclava, sitting in the dark and using a laptop.

Taxpayers may not know they’re the victim of tax-related identity theft until they try to file a return online and learn that a return was already filed using their Social Security number. The IRS may also send a letter saying it identified a suspicious return using your SSN, for example, among other telltale signs.

Taxpayers can still claim a refund if this happens. But they’ll have to take additional steps to prove their identity to the IRS, and their refund will likely be delayed as a result.

Perhaps the best way for taxpayers to prevent identity theft is to request an Identity Protection Personal Identification Number (IP PIN) directly from the IRS, Olson said.

The IP PIN is a six-digit number assigned to eligible taxpayers at the start of each filing season. It’s known only to the taxpayer and, once issued, is needed when filing a tax return as an authentication measure.

A tax return filed by a scammer without the associated IP PIN would not be processed, Olson said. She recommends taxpayers who want an IP PIN request one in the latter part of the calendar year, ahead of the tax season, and that they keep it handy.

The IRS issued 802,449 total IP PINs to taxpayers as of March 4, according to the Treasury’s report.

Taxpayers can also reduce their risk by trying to file a return early in the tax season, experts said. The IRS also recommends several online security measures tied to computers and mobile phones, digital passwords, multifactor authentication and avoiding suspicious e-mail links or attachments.

The IRS also never initiates contact with taxpayers by e-mail, text or social media to request personal or financial information, and never calls to threaten lawsuits or arrest, the agency said.

What to do if you’re a victim of tax ID theft

The IRS recommends victims of tax-related identity theft take a few important steps:

Complete IRS Form 14039, Identity Theft Affidavit, if your e-file return is rejected because of a duplicate filing using your Social Security number. Continue to pay your taxes and file your tax return, even if it must be by paper. Attach the identity theft form to your paper return.
Respond immediately to any IRS notice.
File a complaint with the FTC at identitytheft.gov.
Contact one of the three major credit bureaus (Equifax, Experian or TransUnion) to place a fraud alert on your credit records.
Close any financial or credit accounts opened by thieves.

Reports /TrainViral/

Crypto

Bitcoin’s Recovery – the Downturn Is Over

Published

5 months ago

July 16, 2024

The market is currently in a news-driven environment where the prices of cryptocurrencies have been determined by news agenda rather than fundamentals.

Bitfinex analysts have warned crypto investors to be cautious as bitcoin’s (BTC) recovery over the weekend is not a sign that its correction is over; the asset could witness more bloodshed in the near term.

In the latest Bitfinex Alpha report, experts deemed the market’s reaction this week critical, especially as supply alleviated over the weekend could return when traditional markets open.

“No Man’s Land”

Since Saturday, bitcoin has risen almost 10% from $57,600 to $63,000, closing last week in the green. The asset has surged above the 125-day range low of $60,200, which it broke through earlier this month after news of the German government’s massive BTC selling hit the market.

Market sentiment began to improve after reports that wallets linked to the German government were almost empty. However, the positive sentiment may not be sustained for long as the BTC the German authorities moved to trading desks and exchanges are yet to be sold.

While the supply from Germany appears to have been factored into bitcoin’s market price, Bitfinex analysts believe the end of selling pressure depends on how the involved trading desks execute their trades in the coming days.

Although the shift in sentiment underscores the market’s capacity to integrate new information and adjust expectations quickly, analysts think the market’s reaction over the first two trading days of the week cannot be overlooked for two reasons.

First, the low support level in the $60,200 range has now become a potential resistance line. Second, trading patterns over the past three months suggest that weekends are usually favorable for markets, especially on Saturdays when supply pressure seems to subside.

“We are now in no man’s land until we get clear resolution above or below this level,” the analysts said.

A News-Driven Environment

Besides the potential resistance level and three-month weekend trading pattern, the market is currently in a news-driven environment, where the prices of cryptocurrencies have been determined by news agendas rather than fundamentals.

Since selling pressure concerns are not yet completely obsolete due to upcoming Mt Gox creditor distributions, Bitfinex analysts expect such headlines to continue to have some impact on price movements. As such, the analysts urged investors to exercise caution in their trading strategies.

Reports /Trainviral/

Crypto

Bitcoin ETFs Saw $300M in Daily Net Inflows

Published

5 months ago

July 16, 2024

BlackRock’s IBIT led with $117.25 million in inflows on July 15, also being the most traded Bitcoin ETF.

The US spot Bitcoin ETFs recorded a daily net inflow of $301 million on July 15th. This extended their winning streak to seven consecutive days amidst a broader market recovery.

None of the ETFs recorded outflows for the day.

Bitcoin ETFs Rake in $16.11B in Net Inflows Since Jan

According to the data compiled by SoSoValue, BlackRock’s IBIT, the top spot Bitcoin ETF by net asset value, recorded the largest net inflows of the day at $117.25 million. IBIT was also the most actively traded Bitcoin ETF on Monday, with a volume of $1.24 billion. Ark Invest and 21Shares’ ARKB came in close behind with net inflows of $117.19 million.

Fidelity’s FBTC experienced net inflows of $36.15 million on Monday, while Bitwise’s BITB saw $15.24 million in inflows. VanEck’s HODL, Invesco and Galaxy Digital’s BTCO, and Franklin Templeton’s EZBC funds also recorded net inflows. Meanwhile, Grayscale’s GBTC and other ETFs, such as Valkyrie’s BRRR, WisdomTree’s BTCW, and Hashdex’s DEFI, registered no flows for the day.

A total of $2.26 billion was traded on Monday. The trading volume for these ETFs was less than in March when it exceeded $8 billion on some days. Meanwhile, these funds have collectively attracted $16.11 billion in net inflow since their January launch.

What’s Next For Bitcoin?

Earlier this month, bitcoin’s price decline was mainly due to fears of massive selling pressure from Mt. Gox and the German government’s BTC sales.

But the assassination attempt on pro-crypto former US President and presumptive Republican candidate Donald Trump at Saturday’s rally seemed to spark a recovery in the world’s largest digital asset, and experts are bullish on the asset’s price trajectory going forward. Bitcoin surged more than 9% over the past week and was currently trading slightly below $64,000.

Veteran trader Peter Brandt discussed bitcoin’s price outlook, suggesting a potential major rally. He referred to a pattern he terms “Hump->Slump->Bump->Dump->Pump” and highlighted that the July 5 double top attempt was a bear trap, confirmed by the July 13 close. He sees a likely continued upward trend but warned that a close below $56,000 would negate this bullish view.

“Bitcoin $BTC could be unfolding its often-repeated Hump…Slump…Bump…Dump…Pump chart construction. Jul 5 attempt at the double top was a bear trap, confirmed by Jul 13 close. Most likely scenario now is that bears are trapped. Close below $56k negates this interpretation”

Reports /Trainviral/

Crypto

LI.FI DeFi Platform Exploited, Over $8M Lost

Published

5 months ago

July 16, 2024

PeckShield alert reveals LI.FI’s protocol vulnerability is similar to a March 2022 attack, with the same bug recurring.

The decentralized finance (DeFi) platform LI.FI protocol has suffered an exploit amounting to over $8 million.

Cyvers Alerts reported detecting suspicious transactions within the LI.FI cross-chain transaction aggregator.

LI.FI Issues Warning After $8 Million Exploit

LI.FI confirmed the breach in a statement on July 16 via X: “Please do not interact with any http://LI.FI powered applications for now! We’re investigating a potential exploit.” The team clarified that users who did not set infinite approval are not at risk, emphasizing that only those who manually set infinite approvals seem to be affected.

According to Cyvers Alerts, more than $8 million in user funds have been stolen, with the majority being stablecoins. According to on-chain data, the hacker’s wallet holds 1,715 Ether (ETH) valued at $5.8 million and USDC, USDT, and DAI stablecoins.

Cyvers Alerts advised users to revoke relevant authorizations immediately, noting that the attacker is actively converting USDC and USDT into ETH.

Crypto security firm Decurity provided insights into the exploit, stating that it involves the LI.FI bridge. “The root cause is a possibility of an arbitrary call with user-controlled data via depositToGasZipERC20() in GasZipFacet, which was deployed 5 days ago,” Decurity explained on X.

“In general, the risks behind routers, cross-chain swaps, etc. are about token approvals. Raw native assets like (unwrapped) ETH are safe from these kinds of hacks b/c they don’t have approvals as an option. Most users & wallets also no longer do “infinite approvals” which gives a smart contract total control on removing any amount of their tokens. It’s important to understand which tokens you’re approving to which contracts.

This dashboard looks for all transactions of a user that intersects Lifi. Not all of these transactions indicate risk- but you can see how, broadly, integrations & layers of tech (like how Metamask bridge uses Lifi on BSC) can complicate how users do or don’t put their assets at risk. Revoke Cash is the most well known approval manager app.

But it’s also good security practice to simply rotate your address. New addresses start with 0 approvals, so starting fresh by moving your tokens to a fresh address is another good security practice.” – commented Carlos Mercado, Data Scientist at Flipside Crypto.

Recent Exploit Mirrors March 2022 Attack

Further analysis by PeckShield alert revealed that the vulnerability is similar to a previous attack on LI.FI’s protocol that occurred on March 20, 2022. That incident saw a bad actor exploit LI.FI’s smart contract, specifically the swapping feature, before bridging.

The attacker manipulated the system to call token contracts directly within their contract’s context, making users who had given infinite approval vulnerable. This exploit resulted in the theft of approximately 205 ETH from 29 wallets, affecting tokens such as USDC, MATIC, RPL, GNO, USDT, MVI, AUDIO, AAVE, JRT, and DAI.

“The bug is basically the same. Are we learning anything from the past lesson(s)?” PeckShield Alert said in a July 16 X post.

Following the 2022 incident, LI.FI disabled all swap methods in its smart contract and worked on developing a fix to prevent future vulnerabilities. However, the recurrence of a similar exploit raises concerns about the platform’s security measures and whether adequate steps were taken to address the vulnerabilities identified in the previous breach.

LI.FI is a liquidity aggregation protocol that allows users to trade across various blockchains, venues, and bridges.

Reports /Trainviral/