In An Attempt to Avoid Identity Theft, The California Franchise Tax Board (FTB) is Sending Out Additional Forms to Taxpayers and Tax Professionals

By: Tamara B. Pow, Esq.

Due to a dramatic increase in tax returns that appear to be related to possible identity thefts, the Franchise Tax Board “FTB” is sending out additional forms for taxpayers to fill out, in order to ensure that these refunds do not fall into the wrong hands and that all personal information, is correct. The increase in returns may have resulted from the higher volume of employer data breaches and breaches in the data of tax professionals as well, leading to these precautionary steps from the FTB.

The FTB is issuing forms FTB 3904, Request to Confirm Tax Return Filing. This form simply means that the FTB needs you to confirm if you filed a specific personal income tax return. These forms are sent out when the FTB highly suspects the likelihood of identity theft. The FTB recommends calling the phone number listed on the form immediately at (916) 845-7088, rather than sending or faxing your information, due to the time-sensitive nature and gravity of this issue. An employee at FTB may be able to ask certain questions over the phone in order to validate that the taxpayer filed the return so that the tax refund may be appropriately received. If an FTB employee is unable to verify the taxpayer over the phone, then the FTB may require the form to be filled out and sent back. However you should avoid sending this information by mail, due to the time lag in mail correspondence.

The FTB is also issuing forms FTB 4734D, Request for Tax Information and Documents. This form means that additional information is needed to approve your tax refund, as it serves to determine the taxpayer’s identity. If you or your client receives this form, you are advised to call the phone number listed on the form 916-845-7088. Do not call the practitioner hotline or the toll free number for either form 3904 or 4734D.

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Tamara was chosen as one of the Silicon Valley Business Journal’s 2017 Women of Influence! Press release .

California Bureau of Real Estate Releases Warning to Real Estate Salespersons Who Mislead Consumers into Believing That They Are Brokers and to the Irresponsible Brokers Who Allow Such Practices

By: Tamara B. Pow, Esq .

Back in September of 2015, the California Bureau of Real Estate ( CalBRE ) released a warning, officially known as a supplemental disciplinary advisory, to salespersons working in real estate who illegally mislead consumers into falsely believing that the salesperson is a real estate broker, as well as an additional warning to actual brokers who permit or support such practices by these salespersons.

Real estate brokers, salespersons, and consumers should review this warning and the hypotheticals below. According to CalBRE, these unlawful practices have continued to occur, to the potential detriment of consumers.

Under CA Business and Professions Code Section 10139, any person pretending to be a real estate broker without a license or license endorsement, or who advertises as such is guilty of a public offense punishable by a fine of up to $20,000 or by imprisonment for a term of up to six months, or both. If this violation is committed by a corporation, that fine can increase to $60,000. Additionally, under Section 10140, a violation for false advertising is punishable by a fine of up to $1,000, imprisonment for up to one year, or both. As mentioned in the issued warning, the Commissioner of CalBRE may also suspend or revoke the license of any broker who is guilty of one or more of these offenses. In regards to prosecution, under Section 10130, it is the duty of the District Attorney of each county in this state to prosecute all violations in their respective counties in which the violations occur.

CalBRE has specifically outlined two examples in which these violations typically occur. The first hypothetical is a salesperson who uses a fictitious business name that would lead consumers to think that this business is operated and managed by a real estate broker. For this scenario, let’s call this salesperson John Doe. John Doe conducts business using the name Doe Real Estate. John Doe then advertises his business with that name, and supplements these advertisements with a webpage or other tangible tools. This unlawful practice allows consumers to believe that John Doe is a real estate broker or brokerage firm and not a salesperson who must be supervised by an actual broker when conducting these activities.

The second illegal scenario is Jane Doe or a team of Jane Does branding or identifying themselves as independent real estate practitioners. It is illegal for salespersons to act and/or advertise as an independent entity in real estate. Teams must disclose the name of the responsible broker or brokers, at least one responsible broker’s license number, and use at least one of the responsible brokers’ surname in the title of the team’s name, along with the terms “team,” “group,” or “associates.”

The use of a fictitious name for a real estate firm is itself not illegal (See definition of “Fictitious business name” under Business and Professions Code 10159.7(a)(2)). However, under Section 10159.7(a)(5)(C), a fictitious business name may not include the terms “real estate broker,” “real estate brokerage,” “broker,” “brokerage” or any other obvious term that would lead a member of the public to conclude that the team is offering real estate brokerage services.

Furthermore, salespersons who are active in real estate license activities in the state of California must be affiliated with and reasonably supervised by a responsible broker. Reasonable supervision is defined in CalBRE’s Commissioner Regulation 2725. Incidentally, one of the activities that qualify for broker supervision is reviewing any and all advertising done by the broker’s salesperson or salespersons. Irresponsible brokers who otherwise allow for unlawful practice are also liable and will face similar discipline.

It is imperative that not only licensees review the disciplinary advisory, but consumers as well to make sure they understand who they are working with. For more information regarding this matter, visit the CalBRE website at , look under Essential Information on the homepage, click the link 2017 Real Estate Law, and review the governing rules in the California Business and Professions Code sections 10000 – 11288.

  • For the complete definition of a real estate broker, see California Business and Profession code section 10131.
  • For the complete definition of a salesperson, see California Business and Profession code section 10132.
  • For the minimum requirements for broker supervision and activities that qualify for broker supervision, see California Business and Profession code sections 10131.01(a)(A) through 10131.01(a)(E)(c).

Beware of the New Form W-2 Email Phishing Scam

By: Tamara Pow , Esq.

On February 2 nd , 2017, the Internal Revenue Service, state tax agencies, and the tax industry sent out an urgent alert to all employers regarding a recent spike in cases of the Form W-2 email phishing scam that is now spreading beyond the corporate world, affecting school districts, nonprofit organizations, tribal casinos and organizations, chain restaurants, temporary staffing agencies, healthcare, and numerous other sectors.

In addition to this recent, dangerously updated scam, the W-2 scammers are combining their scheme to steal employee W-2 information with an older scheme on wire transfers that is attacking some organizations more than once.

“This is one of the most dangerous email phishing scams we’ve seen in a long time. It can result in large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme,” said IRS Commissioner John Koskinen.

The Form W-2 phishing scam works through cyber criminals using various spoofing techniques to disguise an email to appear as if it is from an organization executive or corporate officer, using their name. This email is sent to an employee in the Payroll or Human Resources departments, requesting a list of all employees and their Forms W-2. The details within these emails may look like this:

  • Kindly send me the individual 2016 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review
  • Can you send me the updated list of employees with full details (Name, SSN, Date of Birth, Home Address, Salary)
  • I want you to send me the list of W-2 copy of employees wage and tax statement for 2016, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me asap

In the latest twist, cyber criminals are following up with emails from an “executive” to the payroll or comptroller asking that a wire transfer also be made to a certain account. As a result, some companies have lost both employees’ W-2 information and thousands of dollars due to wire transfers. Various businesses that had received this specific version of email phishing scam last year, when it first appeared, are reportedly receiving it again this year.

Employers should immediately report W-2 thefts to the IRS. This will allow the IRS to take steps to help protect employees from tax- related identity theft. The Security Summit, a partnering of federal and state tax agencies, have enacted numerous safeguards in 2016 and 2017 to identify fraudulent returns filed through scams. As the Security Summit partners make progress, cyber criminals need more data to mimic real tax returns.

Company payroll officials should confirm in person any executive-level requests or generally unusual requests for lists of Forms W-2 or Social Security numbers. Organizations that have received a W-2 scam should forward it to both and state tax agencies at . Companies that have received or fallen victim should file a complaint with the Internet Crime Complaint Center (IC3), which is operated by the FBI. We urge all employers to share information with their Payroll, Finance, and Human Resources employees about this W-2 scam and wire transfer scam. Employers should have an internal policy, regarding the distribution of employee W-2 information and conducting wire transfers.

Employees whose Forms W-2 have been stolen should review recommended actions by the Federal Trade Commission at or the IRS at . Employees should file a Form 14039, Identity Theft Affidavit, if their tax return is rejected due to a duplicate social security number or if instructed to do so by the IRS.

The Security Summit, a partnering of Federal and state tax agencies supports a national taxpayer awareness campaign called “Taxes.Security.Together.” and a national tax professional awareness effort called “Protect Your Clients: Protect Yourself.” Both offer simple tips that can help make data more secure. Employees, employers, and individual taxpayers and tax professionals may also check out:

  • IRS Security Awareness Tax Tips
  • Publication 4524, Security Awareness for Taxpayers
  • Publication 4557, Safeguarding Taxpayer Data
  • The Security Summits’ Fact Sheet 2016-21
  • The Social Security Administration