Spring Is Arriving – and So Are Tax Refund Scams

Spring is peak season for filing tax returns—and unfortunately that means it’s tax scam season, too.

To protect the public, the Internal Revenue Service is warning taxpayers to watch out for refund scams and fake calls requesting personal or financial information.

This tax season, the IRS is spreading the word about a growing and elaborate scam that involves fraudulent tax refunds being deposited into taxpayers’ bank accounts. “Several thousand” taxpayers were identified as possible victims of this scam over the course of February 2018.

Here’s how the scam works: Criminals steal client data from tax professionals, file fraudulent tax returns, and then deposit refunds into taxpayers’ real bank accounts.  They then use a variety of tactics to reclaim the refund from the taxpayers.

In one version of the scam, criminals posing as debt collection agency officials acting on behalf of the IRS contact the taxpayers. They claim a refund was deposited in error, and they asked the taxpayers to forward the money to their collection agency.

In another version, taxpayers who receive fraudulent refunds get an automated call from a recorded voice. The caller states he is from the IRS and threatens the taxpayer with criminal fraud charges, an arrest warrant and a “blacklisting” of their Social Security number. The recording then gives the taxpayer a case number and a telephone number to call to return the refund.

Don’t fall for it. There are five tell-tale signs that a caller who claims to be from the IRS is scamming you. The IRS will never:

  1. Call to demand immediate payment, nor call about taxes owed without first having mailed a bill.
  2. Demand that taxpayers pay their taxes without providing an opportunity to question or appeal the amount they say is owed.
  3. Require taxpayers to use a specific payment method for taxes, such as a prepaid debit card, gift card, or wire transfer.
  4. Ask for credit or debit card numbers over the phone.
  5. Threaten to bring in local police or other law-enforcement groups to have taxpayers arrested for not paying.

If you think you’re being scammed, there are steps you can take:

  • If you know you owe taxes or think you might owe, call the IRS at 1.800.829.1040. IRS workers can help you with a payment issue.
  • If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or at www.tigta.gov.
  • You can file a complaint using the FTC Complaint Assistant; choose “Scams and Rip-Offs” and then “Impostor Scams.” If the complaint involves someone impersonating the IRS, include the words “IRS Telephone Scam” in the notes.

It’s also important to remember that fraudulent and erroneous refunds must be returned to the IRS. Visit Tax Topic Number 161 – Returning an Erroneous Refund on how to do so. Determining the proper procedure to follow will depend on whether the refund was issued by direct deposit or paper check.

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