IRS Releases More Details About Latest Taxpayer Scam

Tax prepares, take note: the IRS continues to warn taxpayers of a new twist on an old scam. Criminals are depositing fraudulent tax refunds into individuals’ actual bank accounts, then attempting to reclaim the refund from the taxpayers.

Here are the basic steps criminals follow to carry out this scam:

• Thieves hack tax preparers’ computers to steal taxpayer data.
• They use the stolen information to file tax returns as the taxpayers.
• The refunds are deposited into taxpayers’ bank accounts.
• The thieves contact their victims, telling them the money was mistakenly deposited into their accounts and asking them to return it.

While the IRS is aware of variations of this scam, the agency also knows that this scam may continue to evolve. Here are two current versions of this scam:

1. Criminals pose as debt collection agency officials acting on behalf of the IRS. The thief contacts the taxpayer to report an erroneous refund deposit and request that the taxpayer forward the money to the thief’s collection agency.
2. The taxpayer who received the erroneous refund gets an automated call with a recorded voice saying the caller is from the IRS. The recording threatens the taxpayer with criminal fraud charges, an arrest warrant and a “deny-listing” of their Social Security number. The recorded voice gives the taxpayer a phony case number and telephone number to call to return the refund.

Here are some things you can remind your clients about if someone contacts them about an erroneous refund:

• There are established procedures taxpayers should follow to return erroneous funds to the IRS. Tax Topic Number 161, Returning an Erroneous Refund, has full details about how to return the money, including the actual mailing addresses where a taxpayer should send a paper check, if necessary. By law, interest may accrue on erroneous refunds.
• The IRS encourages taxpayers to discuss the issue with their financial institutions because there may be a need to close bank accounts.
• Taxpayers receiving erroneous refunds also should contact their tax preparers immediately.

For more information, read the Taxpayer Guide to Identity Theft. And as always, visit the Intuit® ProConnect™ Tax Pro Center for continuing coverage of fraud and security issues affecting you and your clients.