Another IRS Tax Scam
The IRS is warning people about another IRS tax scam. It’s already hit several thousand people and based on its success so far, it will probably continue.
- Criminals use stolen client data from tax professionals and use them to file fraudulent tax returns.
- In the tax return, they ask the IRS to deposit the money into the taxpayer’s bank account (or sometimes send a check).
- Criminals then demand that the money be returned.
As with many scams, this has an element of truth that can fool people. Victims really do receive a payment in their bank account from the IRS.
IRS Tax Scam Versions
In one version, criminals use automated calls. The recorded voice claims to be from the IRS and threatens the tax payer criminal fraud charges and an arrest warrant. The recording then gives the victim a telephone number to call and return the refund.
In another version of the scam, criminals pose as a debt collection agency. They claim to be working for the IRS and say that the refund was deposited in error. They then ask the taxpayers to return the money to the collection agency.
The IRS Never Calls or Emails You
A simple thing to remember is that IRS never calls or emails you. If there’s a problem, you’ll receive a letter from the IRS. Ignore the letters, and they’ll start knocking on your door.
I received a few calls from criminals claiming to be from the IRS about a month ago. They used pretty strong language, claimed I owed money, and threatened arrest. However, it was easy to dismiss them simply because I know the IRS never calls.
Avoid the Scam
A simple way to avoid the scam, is to return the refund.
If you notice a refund from the IRS in your bank account, but know you didn’t file a return yet, tell your bank to return it.
Similarly, if you receive a check (and you haven’t cashed it), write void on the check and send it back to the IRS. Include a note stating why you’re returning the check Check this page for addresses where you can mail the check back to.
If you cashed the check, send the payment back using the same procedures.
Multiple Effects on Victims
Victims that pay the criminals lose in several different ways.
- They give the refund to the criminal.
- Because the IRS paid it, victims typically have to pay it back to the IRS too.
- When the victim attempts to file a return, the IRS rejects it because the victim apparently filed a return already.
- Their identity has obviously been stolen and the criminals may use it for other scams, or to access the victim’s credit.
- Because the attackers have their bank account data, they may attempt to withdraw funds from the bank accounts.
What To Do
If you’ve been hit by this or any identity theft, here are some things you can consider doing.
- File a complaint with the FTC. Use this page to start.
- Contact the IRS. You can use Form 14039, “Identity Theft Affidavit.”
- Place a “fraud alert” on your credit records. You’ll need to do so with all three of the major credit bureaus: Equifax, Experian, and TransUnion. This might alert you to unauthorized access to your credit. However, the Equifax data breach of 2017 clearly demonstrated that credit bureaus don’t necessarily have consistent processes in place to protect consumers.
- Freeze your credit reports with all three major credit bureaus. This prevents anyone (including you) from applying for new credit. While it can inconvenience you because you won’t be able to apply for credit, it will protect from additional losses. This article includes some FAQs on credit freezes.
- Close bank accounts. If a criminal has already accessed one of your bank accounts, the IRS recommends talking to the financial institution about possibly closing the compromised bank account.