IRS Alerts Payroll and HR Professionals to Phishing Schemes

IRS Alerts Payroll and HR Professionals to Phishing Schemes

Source: IRS Newsletter #IR-2016-34 [Links to additional information are in color below.]

On March 3, 2016, the Internal Revenue Service [IRS] issued an alert to payroll and human resources professionals warning of an emerging phishing e-mail scheme that purports to be from executive officers or supervisors and requests employee personal information.

The Merriam‑Webster dictionary defines phishing as "a scam by which an e-mail user is duped into revealing personal or confidential information which the scammer can use illicitly."

The IRS reports that it has learned this scheme – part of the surge in phishing e-mails seen this year – already has claimed several victims as payroll and human resources offices mistakenly e-mailed payroll data including W-2 Forms that contain Social Security numbers and other personally identifiable information, to cyber-criminals posing as executive officers or supervisors.

IRS Commissioner John Koskinen said “If your CEO appears to be e-mailing you for a list of company employees, check it out before you respond. Everyone has a responsibility to remain diligent about confirming the identity of people requesting personal information about employees.”

IRS Criminal Investigation is reviewing several cases in which individuals have been tricked into sharing Social Security numbers with what turned out to be cyber-criminals. Criminals using personal information stolen elsewhere then seek to “monetize” this data, including filing fraudulent tax returns for refunds due a taxpayer. 

There is also a phishing variation is known as a “spoofing” e-mail. The e-mail will contain, for example, the actual name of an executive officer or supervisor. In this variation, the “CEO” sends an e-mail to a payroll or personnel office employee requesting a list of employees and information including employee Social Security numbers.

The following are actual examples of the information requested in these “spoof mails”:

“Kindly send me the individual 2015 W-2 (PDF) and earnings summary of all W-2 of our employees for a quick review

“Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary) as at 2/2/2016.

“I want you to send me the list of W-2 copy of employees wage and tax statement for 2015,

“I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and e-mail them to me ASAP.”

The IRS recently renewed and issued a consumer alert [IR-2016-28, Feb. 18, 2016] for e-mail schemes after seeing an approximate 400 percent surge in phishing and malware incidents so far this tax season and receiving other reports of scams targeting others in a wider tax community.

The e-mails are designed to trick individuals into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. The phishing schemes can ask individuals to provide a wide range of personal and financial information. E-mails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.

The IRS, state tax agencies and tax industry are engaged in a public awareness campaign – Taxes. Security. Together. – to encourage everyone to do more to protect personal, financial and tax data. See IRS.gov/taxessecuritytogetheror Publication 4524 for additional information addressing steps that can take to protect employees and individuals from spoofs, scams and phishing.  

Determining if an administrative agency's decision is arbitrary and capricious

Determining if an administrative agency's decision is arbitrary and capricious

Muhammad v Zucker, 2016 NY Slip Op 01446, Appellate Division, First Department

Dr. Rafeak Muhammad was disciplined after he was found to have falsified workers' compensation forms and treating workers' compensation patients when it was no longer medically indicated in his private practice.

Dr. Muhammad filed an Article 78 petition in which he sought to modify a consent order that limited his license to practice medicine and annul the determination of the Director of the Office of Professional Medical Conduct [the Director] with respect to certain modifications Dr. Muhammad had requested.

Supreme Court denied Dr. Muhammad's petition and dismissed the proceeding. The Appellate Division unanimously affirmed the Supreme Court’s ruling.

Citing the so-called Pell Doctrine,* the Appellate Division explained that the test used by courts to determine if an administrative agency's decision is arbitrary and capricious is whether the determination "is without sound basis in reason and is generally taken without regard to the facts." The court said that upon its review of the record, the Director’s decision not to join in Dr. Muhammad’s application seeking a modification of the underlying consent order "was rational and based on the facts.”

Dr. Muhammad had asked the Director to consider two proposed modifications of the consent order. The first modification would permit Dr. Muhammad to treat workers' compensation patients in the Jamaica Hospital Ophthalmology Clinic. The second modification Dr. Muhammad sought would permit him to treat workers' compensation patients in his private practice.

The Appellate Division noted that the Director concluded that the circumstances described in Dr. Muhammad’s letters of support from the chief financial officer of the hospital and the head of the ophthalmology department warranted only the adoption of first proposed modification.

The Director’s response to Dr. Muhammad's second modification request -- that he be permitted to treat workers' compensation patients in his private practice -- was a limited second modification order that would entail a more gradual release of the license restriction. 

This, said the court, demonstrated that the facts of this matter were considered and that the Director exercised his discretion in advocating an incremental approach, concluding that that this was not a case that would require the court to "surmise or speculate as to how or why an agency reached a particular conclusion."

* Pell v Bd. of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222

The decision is posted on the Internet at:

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http://www.nycourts.gov/reporter/3dseries/2016/2016_01446.htm

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A Reasonable Penalty Under The Circumstances - a 618-page volume focusing on New York State court and administrative decisions addressing an appropriate disciplinary penalty to be imposed on an employee in the public service found guilty of misconduct or incompetence. For more information click on http://booklocker.com/7401.html 

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Recent decisions issued by the New York City Office of Administrative Tribunals and Hearings

Recent decisions issued by the New York City Office of Administrative Tribunals and Hearings

Click on text highlighted in color to access the complete text of the decision.

Failure to provide a urine sample for a drug test

Dep't of Sanitation v. E. V., OATH Index No. 805/16

 

A sanitation worker was charged with refusing to undergo a drug test after he could not provide sufficient urine within the requisite three hour period for the test.

The employee argued that his blood pressure medication limited his ability to produce urine. Two doctors, testifying for the appointing authority, concluded that it is unlikely that the particular medication could have had such an effect. The employee did not offer any medical documentation showing his difficulty with urinating prior to the date of the contested drug test and had no trouble producing enough urine in subsequent drug tests.

OATH Administrative Law Judge John B. Spooner sustained the charge and recommended 30-day suspension without pay.   

Physical altercation with a co-worker

Health & Hospitals Corp. (Renaissance Health Network) v. James, OATH Index No. 2085/15

OATH Administrative Law Judge Kara J. Miller recommended termination of an administrative associate at a health clinic who was alleged to have been both excessively late to work and having had a physical altercation with a co-worker.

The appointing authority alleged that the employee approached a co-worker and pushed him without provocation, using obscenities and attracting the attention of various other staff members. Multiple witnesses confirmed the co-worker's testimony. The employee argued that the incident stemmed from the co-worker sexually harassing her but provided no evidence to indicate that the alleged harassment actually took place. Moreover, the ALJ found that employee's testimony contained significant inconsistencies and implausible assertions.

Judge Miller sustained the physical altercation charge along with an uncontested charge of excessive lateness. 

Confrontation with a superior

Dep't of Sanitation v. Anonymous, OATH Index No. 056/16

The Department of Sanitation charged a sanitation worker with misconduct after he had a confrontation with a superior at work.

The worker had yelled at a Deputy Chief and pushed a car door into him, fracturing his finger. The worker also refused a drug test after being ordered to take one immediately after the incident.

OATH Administrative Law Judge Faye Lewis weighed the testimony of both parties along with medical documentation and photographs of the Deputy Chief's injury and sustained the charges, recommending termination of employment.  

Initiation of an unauthorized investigation

Dep't of Sanitation v. Serrano, OATH Index No. 813/16

OATH Administrative Law Judge Kevin F. Casey sustained charges of misconduct against a sanitation worker who completed an unauthorized investigation on behalf of a friend.

The employee was alleged to have questioned private security personnel about their procedures for issuing littering summonses while he was on duty. This inquiry following a complaint from the employee’s friend that she was being harassed by the security officers in her housing complex. The employee did not record or report his actions.

Judge Casey concluded that the employee used his position in the Department improperly to assist a friend, failed to document his activities, and acted unprofessionally. A 30-day suspension without pay was recommended.   

Failure to submit documentation justifying emergency leave and sick leave

Dep't of Sanitation v. Adkinson, OATH Index No. 2170/14

The Department of Sanitation proved that on multiple occasions a sanitation worker failed to submit documentation for emergency and sick leave, was inaccessible for home visits while on sick leave and failed to report to a clinic for examination when required.

Given the number of violations, OATH Administrative Law Judge Ingrid M. Addison recommended termination of employment but suggested that the Department consider the employee's expressed desire to retire shortly as a viable alternative to termination.    

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A Reasonable Penalty Under The Circumstances - a 618-page volume focusing on New York State court and administrative decisions addressing an appropriate disciplinary penalty to be imposed on an employee in the public service found guilty of misconduct or incompetence. For more information click on http://booklocker.com/7401.html

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Tax Guide to U.S. Civil Service Retirement Benefits

Tax Guide to U.S. Civil Service Retirement Benefits

IRS has published its latest tax guide for preparing tax returns involving U.S. Civil Service Retirement benefits. It is posted on the Internet at: https://www.irs.gov/publications/p721/

Unless an administrative agency explains why it is deviating from its past decisions in making its ruling, courts take a dim view of departures from its precedent

Unless an administrative agency explains why it is deviating from its past decisions in making its ruling, courts take a dim view of departures from its precedent

Zaremski v New Visions, 2016 NY Slip Op 01220, Appellate Division, Third Department

In Zaremski, the Appellate Division reminded the Workers’ Compensation Board that a decision of the Board would be deemed arbitrary "if it departs from prior Board precedent and fails to explain the reasons for its departure".

In January 2012, James Zaremski suffered an injury to his lower back during the course of his employment as a general maintenance repairperson for the employer and did not return to that employment. At the time of his injury, claimant was also solely operating a self-owned appliance repair business and in June 2012 he resumed operating that business on a part-time basis but with physical restrictions.

Zaremski’s claim for workers' compensation benefits was established December 2012 and, following a hearing on the issue of reduced earning benefits, a Workers' Compensation Law Judge [WCLJ] found that he was entitled to tentative reduced earnings of $300 per week based upon the difference between his average weekly wage from his employment as a general maintenance repairperson and his weekly earnings subsequent to his return to work at his self-employment business.

Upon review, the Workers' Compensation Board modified the WCLJ’s decision and ruled that Zaremski had no compensable claim for reduced earnings after January 22, 2013.

The court said that the Board has previously determined that although wages from a noncovered concurrent employment cannot be included in the calculation of a claimant's average weekly wage pursuant to Workers' Compensation Law §14(6), such wages must be taken into account when computing a claimant's reduced earnings under Workers' Compensation Law §15(5-a).

Thus in Zaremski’s case the Board apparently ignored its precedent when it held that that  Zaremski's self-employment did not qualify as concurrent employment to increase his average weekly wage, the earnings from his self-employment could not be considered in determining his “reduced earnings.”

The Appellate Division held that because the Board failed to explain its departure from this precedent, the decision must be reversed and the matter remitted for further proceedings before the Board.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_01220.htm