The Delaware Division of Revenue would like to alert taxpayers to a new and growing scam involving fraudulent tax refunds being deposited into real taxpayer bank accounts. After the money is deposited, the crooks use various tactics to con taxpayers into turning over those funds.

How does it work? Thieves are using schemes, including phishing, to steal client data from tax professionals. They then use that data to file fraudulent tax returns, and use the taxpayers’ real bank accounts to deposit those tax refunds. Finally, the thieves pose as the IRS or other law enforcement representatives, call attention to the error, and ask taxpayers to return the money to them.

If you ever receive a refund that you are not expecting, call the Division of Revenue for more information. You can also check out the Taxpayer Guide to Identity Theft at IRS.gov to learn how to protect yourself from tax scams, where you can also find help with returning an erroneous refund.

The IRS warns that versions of this new scam may continue to evolve. If you think you’re being scammed, call the Delaware Division of Revenue’s Fraud Team at (302) 856-5358 for assistance.

During the online holiday shopping season, the Delaware Division of Revenue is joining with the IRS, other state tax agencies and the tax industry to mark “National Tax Security Awareness Week.” From November 27 through December 1, we’d like to remind people to be vigilant with their personal information. While you are shopping for gifts, criminals are shopping for credit card numbers, financial account information, Social Security numbers and other sensitive data that could help them file a fraudulent tax return.

Cyber criminals seek to turn stolen data into quick cash, either by draining financial accounts, charging credit cards, creating new credit accounts or even using stolen identities to file a fraudulent tax return for a refund. Anyone who has an online presence should take a few simple steps that could go a long way to protecting their identity and personal information.

Here are seven steps to help with online safety and protecting tax returns and refunds in 2018:

• Shop at familiar online retailers. Generally, sites using the “s” designation in “https” at the start of the URL are secure. Look for the “lock” icon in the browser’s URL bar. But remember, even bad actors may obtain a security certificate so the “s” may not vouch for the site’s legitimacy.
• Avoid unprotected Wi-Fi. Beware of making purchases at unfamiliar sites or clicking on links from pop-up ads. Unprotected public Wi-Fi hotspots also may allow thieves to view transactions. Do not engage in online financial transactions if using unprotected public Wi-Fi.
• Learn to recognize and avoid phishing emails that pose as a trusted source such as those from financial institutions or the IRS. These emails may suggest a password is expiring or an account update is needed. The criminal’s goal is to entice users to open a link or attachment. The link may take users to a fake website that will steal usernames and passwords or an attachment may download malware that tracks keystrokes.
• Keep a clean machine. This applies to all devices — computers, phones and tablets. Use security software to protect against malware that may steal data and viruses that may damage files. Set it to update automatically so that it always has the latest security defenses. Make sure firewalls and browser defenses are always active. Avoid “free” security scans or pop-up advertisements for security software.
• Use passwords that are strong, long and unique. Experts suggest a minimum of 10 characters, but longer is better. Avoid using a specific word; longer phrases are better. Use a combination of letters, numbers and special characters. Use a different password for each account. If you can’t remember all your passwords, use a password manager, which securely stores the passwords for you.
• Use multi-factor authentication. Some financial institutions, email providers and social media sites allow users to set accounts for multi-factor authentication, meaning users may need a security code, usually sent as a text to a mobile phone, in addition to usernames and passwords. For added protection, some financial institutions also will send email or text alerts when there is a withdrawal or change to the account. Generally, users can check account profiles at these locations to see what added protections may be available.
• Encrypt and password-protect sensitive data. If keeping financial records, tax returns or any personally identifiable information on computers, this data should be encrypted and protected by a strong password. Also, back-up important data to an external source such as an external hard drive. When disposing of computers, mobile phones or tablets, make sure to wipe the hard drive of all information before throwing it away.

There are also a few additional steps people can take a few times a year to make sure they have not become an identity theft victim. Receive a free credit report from each of the three major credit bureaus once a year. Check it to make sure there are no credit changes that don’t look familiar. Create a “My Social Security” account online with the Social Security Administration which can be used to see how much income is attributed to your SSN annually. This can help determine if someone else is using your SSN for employment purposes.

The Division of Revenue, the IRS, and the tax industry are committed to working together to fight against tax-related identity theft and to protect taxpayers. Visit the “Taxes. Security. Together.” awareness campaign, or review IRS Publication 4524, Security Awareness for Taxpayers for additional information.

Delaware Department of Finance Secretary Rick Geisenberger has announced the appointment of Jennifer Noel, Esq. as the new Director for the Division of Revenue, effective October 1, 2017.

Ms. Noel has represented the Department of Finance, the Division of Revenue, and the Division of Accounting as a Deputy Attorney General since 2012. In this role, she helped draft major legislation reforming corporate income tax laws (the Delaware Competes Act) as well as updates to tobacco, alcohol, personal income, and estate tax laws. She has worked with taxpayers and their representatives to ensure cases are managed fairly and transparently, while working with the Department in diverse matters, including statutory interpretation, audit management, and contractual obligations.

“Jenn is well known to tax practitioners throughout the State,” said Secretary Geisenberger. “With two and half decades of experience in tax law – mostly as an advocate for taxpayers, but also as the Division of Revenue’s lawyer – she is uniquely equipped to fairly administer Delaware’s tax system while driving forward the Carney Administration’s efforts to continuously improve customer service to our citizens and businesses.” Ms. Noel will also serve as Delaware’s State Escheator, with responsibility for unclaimed property administration.

Prior to joining state government, Ms. Noel was a tax attorney in private practice for 12 years at one of Wilmington’s largest law firms, Young Conaway Stargatt & Taylor, LLP. While completing her undergraduate and law degrees, she worked as a law clerk, tax paralegal and legal assistant. Ms. Noel earned her J.D. and B.S. degrees from Widener University, and is currently pursuing an LLM in Tax from Georgetown University, with a certificate in state and local tax. She is active in the Delaware tax community, having chaired the Delaware State Bar Association’s Tax Section and served on the planning committee for the Delaware Tax Institute.

“I look forward to the opportunity to continue working with the outstanding team at the Division of Revenue to serve the taxpayers of the State of Delaware. Customer service will be a priority as we look for ways to improve our effectiveness and create greater efficiencies in our processes,” said Director Noel.

Division of Revenue Director Patrick T. Carter has announced that Delaware tax season will begin Monday, January 23, 2017. Citizens are encouraged to file their 2016 State of Delaware Personal Income Taxes online at www.delaware.gov. This year’s filing deadline is Monday, May 1, 2017.

During the last filing season, the State dealt with a surge of fraudulently filed personal income tax returns, and stopped over $9 million in fraudulent refunds from being issued. In order to better identify fraudulent returns, the Delaware Division of Revenue has created new methods of detecting and preventing fraudulent refunds. However, as a result, the first refunds will not be issued until after February 15, 2017.

This year, Delaware is also urging taxpayers to electronically file their returns. Online filing offers many advantages. Refunds from electronically filed returns are issued on average within 2 weeks, while refunds from paper-filed returns average over seven weeks. Last year, the average time to issue a refund for all tax filing methods combined was just over 20 days.

Delaware offers the following electronic filing options:

1. Those who don’t need tax preparation software can file for free on the Delaware Division of Revenue website. This online system is extremely user-friendly and available 24/7. The system also allows taxpayers to file their returns and then schedule any payment due closer to the May 1st deadline. Taxpayers may pay their State of Delaware taxes on this system using a credit card or by debiting their bank account.
2. Those who prefer tax-preparation software can electronically file their federal and state income tax returns for a fee, although these products also offer free-filing options for Delaware taxpayers who meet the following qualifications:
   • Adjusted gross income is less than the software’s established means criteria; or
   • Active-duty military with an adjusted gross income of $60,000 or less (including Reservists and National Guard); or
   • Qualify for the Federal Earned Income Tax Credit (EITC)

For paper-filed returns, the State uses a modernized processing system that identifies tax filings based on the return type. Any taxpayer who files a 2016 tax return using a previous-year return, or who modifies the paper return in some way, will experience significant delays. Paper tax returns will be available at local libraries or for download at www.revenue.delaware.gov.

Because Delaware does not maintain reciprocity agreements with other states, it is important for anyone who is not a Delaware resident – but who has worked in Delaware – to understand that they must file a Delaware tax return. Delaware Residents who work out-of-state are required to file returns with Delaware in addition to the state where they worked.

By law, Delaware employees should receive their W-2 employment forms by January 31, 2017 for any job worked during the 2016 calendar year. Those who haven’t received a W-2 by January 31st should contact their employer.

Division of Revenue Director Patrick T. Carter has announced that Delaware tax season will begin Tuesday, January 19, 2016. Citizens are encouraged to file their 2015 State of Delaware Personal Income Taxes online at www.delaware.gov. This year’s filing deadline is Monday, May 2, 2016. Online filing offers many advantages, and Delaware urges taxpayers to electronically file their returns. Refunds from electronically filed returns are issued on average within 2 weeks, while refunds from paper-filed returns average over seven weeks. Last year, the average time to issue a refund for all tax filing methods combined was just over 20 days.

Delaware offers the following electronic filing options:

1. Those who don’t need tax preparation software can file for free on the Delaware Division of Revenue website. This online system is extremely user-friendly and available 24/7. The system also allows taxpayers to file their returns and then schedule any payment due closer to the May 2nd deadline. Taxpayers may pay their State of Delaware taxes on this system using a credit card or by debiting their bank account.
2. Those who prefer tax-preparation software can electronically file their federal and state income tax returns for a fee, although these products also offer free-filing options for Delaware taxpayers who meet the following qualifications:

• Adjusted gross income is less than the software’s established means criteria; or
• Active-duty military with an adjusted gross income of $60,000 or less (including Reservists and National Guard); or
• Qualify for the Federal Earned Income Tax Credit (EITC)

For paper-filed returns, the State uses a modernized processing system that identifies tax filings based on the return type. Any taxpayer who files a 2015 tax return using a previous-year return, or who modifies the paper return in some way, will experience significant delays. Paper tax returns will be available at local libraries or for download at www.revenue.delaware.gov.

Because Delaware does not maintain reciprocity agreements with other states; it is important for anyone who is not a Delaware resident – but who has worked in Delaware – to understand that they must file a Delaware tax return. Delaware Residents who work out-of-state are required to file returns with Delaware in addition to the state where they worked.

By law, Delaware employees should receive their W-2 employment forms by January 31, 2016 for any job worked during the 2015 calendar year. Those who haven’t received a W-2 by January 31 should contact their employer.

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Leslie A. Poland
Public Information Officer
Delaware Department of Finance
Division of Revenue
(302) 577-8522
leslie.poland@delaware.gov