Scammers Are Using a Classic Tax Refund Scam This Year, But With a New Twist
It seems like every year there’s a new tax refund scam. However, this year, there’s an old tax scam that fraudsters are putting a new spin on. Just when you think the tax crooks can’t possibly think of any more ways to steal, another scheme is created. The IRS recently issued a warning, letting taxpayers know they should be on the lookout for this sneaky scam.
Here’s information about this classic tax refund scam with a new twist.
The Internal Revenue Service says there’s a scam where false refunds are being deposited into taxpayer bank accounts. So instead of scammers having the funds sent directly to them, and risk getting caught, they send it to the taxpayer’s account. Fraudsters then find ways to convince taxpayers to release the funds. There are several versions of the scam.
Once you’ve identified the variations of this scam, don’t get comfortable and think you know all the ways to avoid becoming a target. The IRS says fraudsters will likely create new versions of this scam.
Next: This is how crooks are stealing your personal information.
How it works
IRS scammers are using several sneaky tactics, such as phishing, to steal your private information from tax preparers. After gaining access to a tax preparer’s computer files, a scammer uses your information to file a fraudulent tax return.
With this information, he or she can use your bank account to deposit a false tax refund. The fraudster then pretends to be an IRS representative and asks you to return the money.
Next: This is why scammers are using this scheme.
Why are scammers doing this?
The simple answer: because they can. People who commit fraud for a living will always look for new ways to steal. The only thing you can do is try to reduce your chances of becoming their next victim. So, you can’t prevent the crime, but you can lower your chances. We’ll tell you about a few ways you can do that.
Another reason scammers are committing this crime is that it can be difficult to detect. Fraudulent tax returns are harder to identify when real information such as dependents, home address, and income is used.
Next: Don’t become the next victim.
What you can do
It pays to be a smart and alert taxpayer. Arm yourself with information so you can be prepared for whatever a scammer throws your way. Although you can’t prevent becoming a victim of tax-time fraud, you can reduce your chances.
Here are a few ways you can fight back and protect your cash. We’ll also tell you what to do if you’ve been a victim of tax-time identity theft.
Next: The early bird is a smart bird.
File as soon as you have all the necessary paperwork. This way, you can beat scammers to the punch. It’s more likely you’ll become a victim of a tax refund scam if you wait too long to file. The IRS says the number of potential victims rose from a few hundred to several thousand in just days.
Don’t give scammers any opportunity to use your procrastination against you. Tax time isn’t pleasant but becoming a victim of identity theft can make tax season even worse.
Next: Watch out for debt collectors.
Be leery of tax-time debt collectors
You might not trust debt collectors in general, but tax time is when you should be even leerier. In one version of this scam, criminals posing as debt collectors acting on behalf of the IRS will contact you and say a refund was deposited in error. The fake debt collector will then ask you to forward the money to their collection agency.
Next: Hang up on weird phone calls.
Watch out for automated calls
In another version of this scam, you might receive an automated call with a person saying he or she is from the IRS. The caller might threaten you with criminal fraud charges, an arrest warrant, and a “blacklisting” of your Social Security Number. The thief hopes to frighten you into action. Finally, the caller will provide a case number and a telephone number, so you can call to return the “misdirected” refund.
Next: Let your bank know what is happening.
Reach out to your bank
If you’re a victim of this tax scam, you’re likely shocked and you might not know what to do first. Although this situation is unpleasant, you’ll need to act fast.
It’s important for you to contact your bank right away. It’s possible you’ll need to close your bank account, so you can avoid future problems. You should also contact your tax preparer.
Next: Let the IRS know you were a victim of identity theft.
File an Identity Theft Affidavit
One sure sign your personal information has been compromised is if your tax return is rejected. The IRS says a rejection will happen because a return with your Social Security number is already on file.
If this happens to you, the IRS recommends following the steps outlined in the Taxpayer Guide to Identity Theft. If you can’t file electronically you’ll need to mail a paper tax return along with Form 14039, Identity Theft Affidavit. This is a notarized document that proves you are an identity theft victim.
Next: Here’s how to return the erroneous refund.
Return the refund the right way
If you received an erroneous refund through direct deposit, the IRS recommends reaching out to the Automated Clearing House (ACH) department of the financial institution where the deposit was received. They can return the refund to the IRS.
First, call the IRS at 800-829-1040 (individual return) or 800-829-4933 (business return) to let them know why the direct deposit is being returned. If you received a paper check, write “void” on the back (in the endorsement section) and mail the check back to the IRS. Also, include a note explaining why you’re sending the check back.
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