Friday, April 03, 2009

Routine Audit or Mass. DOR Phishing Scam?

We got an "interesting" letter in the mail today from the Massachusetts Department of Revenue - Audit Division. It's titled "Notice of Intent to Assess".

Note: My wife still works part-time in Massachusetts, so we did have some reportable income earned in Massachusetts, which we dutifully reported on both our Federal and Massachusetts tax returns for 2008.

Bear in mind, we are literally living paycheck-to-paycheck now, and using up what money we have in our savings account, just to make ends meet. When Massachusetts wants its lemonade, no lemon's too small to squeeze, I guess.

Here's the body of the letter (with some parts abbreviated):

Dear Taxpayer,

You are receiving this notice because your 2008 Massachusetts Income tax Return has been selected for verification. In order to resolve this issue, it is necessary that you provide the following information and/or documentation.

Side note: Citizenship "documentation" not required in Massachusetts for those looking to sign up for their "free" healthcare benefits.

1. A completed copy of your 2008 Federal Income Tax Return including all schedules, attachments, and all forms to substantiate any withholding amounts shown on your return.

It's not enough, apparently, that they got our Massachusetts tax return which we filed with all the legally-required schedules, attachments, and forms.

What more information could they need (or be entitled to, for that matter) that's on our federal tax return?

2. Copy of US Schedule EIC - Earned Income Credit (Qualifying Child Information). Please include a copy of your social security card and a copy of the social security card for each dependent listed on the return. If an Individual Taxpayer Identification Number (ITIN) was used for anyone listed on the return, including dependents, please submit a copy of the letter issued by the IRS to verify the number(s).

Side note: Non-forged social security cards are not required for...ah, screw it.

They then ask for a whole slew of information to verify, income and expenses, a client list, as well as a description and nature of the business activity in question.

The rest of the letter is pretty much just "If you wish to discuss this notice..." nonsense, and information on how to appeal this request or to request a settlement.

But, this paragraph in particular caught my attention.

If you do not respond by 30 days from the date on this notice the earned income credit shown on your return, $425, will be disallowed pursuant to G.L. c. 62C Section 26(b).

In my cynical and jaded eyes, this has got "phishing expedition" written all over it. Send out a "Notice of Intent to Assess" to anyone who filed a Massachusetts tax return, and snatch back the earned income credit from whatever percentage of those folks tosses the letter in the trash, thinking their tax return's done, so it can't be that important.

If they send 500,000 of these letters out, and five percent go unanswered, that's 10-million plus for the state's coffers - after expenses. All they'd have to do to process them all is hire a handful of temps at $8.00/hour to check of the names as the responses come back.

My questions to anyone reading this are:

1. If you filed a 2008 Massachusetts Tax Return, claiming an earned income credit, have you also received a similar notice in the mail recently?

2. Am I way off base here?

Could this simply be a routine request for additional information no provided on our original return? Note also, we had our tax return professionally prepared at considerable expense (specifically for the purpose of avoiding this kind of hassle).

Have I mentioned how much I loathe Massachusetts lately?

I mean, I'm not asking to be treated differently from anyone else. I only wanted to be treated like an illegal alien.

Or a member of Congress Obama's cabinet.

Whichever's easier.