Taxpayers Beware of New Twist on the Refund Scam

The Internal Revenue Service (IRS) is warning tax preparers of a new twist on an old scam. Just hours after the IRS began expecting tax returns on January 29, erroneous refunds were being deposited into tax preparers’ bank accounts. The IRS believes that scammers were able to infiltrate the computers in tax preparers’ offices to complete return data on thousands of consumers. The scammers are using stolen data – including Social Security numbers, dependents information and bank account information – to file refund claims on behalf of the victimized taxpayers.

If the victimized taxpayer’s erroneous refund was direct deposited into their bank account, the scammer will call posing as the IRS demanding the money be returned. If the victim does not answer, a voicemail will be left stating that their Social Security number will be “blacklisted”, a warrant is out for their arrest and they will be charged with fraud. A number is also left for the victim to call regarding their information on returning their tax refund.

The IRS advises victims of this scam to take the following steps:

If the erroneous refund was a direct deposit:

  1. “Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the IRS.
  2. Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.”

If the erroneous refund was a paper check and hasn’t been cashed:

  1. “Write “Void” in the endorsement section on the back of the check.
  2. Submit the check immediately to the appropriate IRS location.
  3. Include a note stating, “Return of erroneous refund check because (and give a brief explanation of the reason for returning the refund check).”

The erroneous refund was a paper check and you have cashed it:

  • “Submit a personal check, money order, etc., immediately to the appropriate IRS location.
  • If you no longer have access to a copy of the check, call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) and explain to the IRS assistor that you need information to repay a cashed refund check.
  • Write on the check/money order: Payment of Erroneous Refund, the tax period for which the refund was issued, and your taxpayer identification number (social security number, employer identification number, or individual taxpayer identification number).
  • Include a brief explanation of the reason for returning the refund.”

For a list of appropriate IRS locations to return an erroneous refund, go here.

MoneyWatch suggests that if you are a victim of this scam, close the bank account in which the refund was direct deposited, since that account has now been compromised.

Source: MoneyWatch and Internal Revenue Service

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