With so many Social Security numbers hacked last year, most taxpayers are on high alert to make sure cyber-crooks don’t misdirect their tax refunds from the Internal Revenue Service. The best way to prevent it is to file your taxes early.
But now the IRS is warning taxpayers about a new and growing scam involving criminals who steal data from tax professionals and file fraudulent tax returns. The “refund money” goes into taxpayers’ real bank accounts ― but then these criminals use various tactics to con the taxpayer into turning those funds over to them.
“It’s a new twist on an old scam,” wrote national tax writer Kelly Phillips Erb in Forbes.
In one version of the new scam, criminals pose as debt collection agents acting on behalf of the IRS. They tell the taxpayer that a refund was deposited in error, and they give information to forward the money to their collection agency.
In another version, the taxpayer gets an automated call with a recorded voice purporting to be someone from the IRS. The caller threatens the taxpayer with criminal fraud charges, an arrest warrant and a “blacklisting” of their Social Security number. The recorded voice gives the taxpayer a case number and a phone number to call to return the refund.
One key point: The real IRS will never call or email a taxpayer. Anyone who initiates contact in this manner and claims to be calling on behalf of the IRS is a scammer.
The IRS warns that versions of the scam may continue to evolve, and the number of potential victims has already grown from a few hundred to several thousand in just days.
Why is this scam enjoying such success? Unlike previous scams, it offers a higher degree of believability that the call from the alleged IRS representative is real. After all, the taxpayer actually does have a tax refund in his or her bank account as “proof” and the caller knows the exact amount and possibly other personal details.
The IRS urges taxpayers to follow its established procedures for returning money on an erroneous refund. If the mistaken refund was a direct deposit, contact the Automated Clearing House department of the bank or financial institution where the deposit was received and have them return the refund to the IRS. Taxpayers can also call the IRS toll-free at (800) 829-1040 (for individual returns) or (800) 829-4933 (for business filers) to explain why the direct deposit is being returned. If a paper check was sent and not cashed, the IRS advises taxpayers to write “void” in the endorsement section on the back of the check and submit it to the appropriate IRS location, given here.
If you cashed a paper check of an erroneous refund, submit a personal check, money order, etc., immediately to the appropriate IRS location with a note explaining that it’s a repayment of an erroneously paid refund. And do it quickly, because you may be charged interest on the money that wasn’t yours.
One last thing: Taxpayers receiving erroneous refunds should contact their tax preparers immediately, says the IRS. That’s because thieves are targeting professional tax preparers, using phishing and other schemes to steal client data to feed the scheme.
Why are thieves going to such lengths? They know it is more difficult to identify and stop fraudulent tax returns when they are using real client data such as income, dependents, credits and deductions. Additionally, it’s harder to track when criminals can find alternative ways to get the fraudulent refunds delivered to themselves rather than the real taxpayers ― in other words, no more stealing checks out of mailboxes.