Get your tax refund before you file? Here's why it's happening
Bank accounts targeted by scammers, IRS warns Wochit
Wait, what? You didn't file your income tax return yet but suddenly, somehow you spotted a bunch of money in your bank account from a refund?
Believe it or not, criminals are using real bank accounts in a fast-spreading scam that could gain more traction as we move into prime refund season, according to the Internal Revenue Service.
"It's super-sophisticated," said Luis Garcia, a spokesperson for the IRS In Detroit.
"If you haven't filed your taxes — especially if you're not expecting a refund — and money shows up in your account, don't touch it."
Last summer, the IRS reported that cybercriminals had been targeting tax professionals. According to the IRS, there were 177 tax professionals or firms that reported data thefts involving client information relating to thousands of tax filers from January 2017 through May 2017. Much of that theft started with a phishing e-mail sent to the tax professional posing as a potential client to gain access to the professionals’ computer systems and collect the personal information of existing clients.
After stealing the data from tax professionals, criminals could have your bank account number if you requested direct deposit of a refund earlier.
Now, the crooks who file fake tax returns to steal refund cash could be giving the IRS your bank account information for direct deposit of fraudulent refunds.
How do the crooks then get the cash?
One scheme includes an automated call that claims that you're a willing participant in tax fraud and demands that you return the money. Of course, if you follow their directions, you're handing the money over to the crooks.
Garcia said some people could be caught off guard by such calls, especially when they suddenly spot a deposit from the U.S. Treasury in their account.
"It's jarring when somebody calls you and they know your bank account," Garcia said.
The IRS is set to begin issuing tax refunds as of Feb. 27 for many early filers who receive the Earned Income Tax Credit and the Additional Child Tax Credit.
So the ID thieves who filed fake returns claiming those credits will be looking to collect soon — if they used your bank account for direct deposit.
As part of the crackdown on tax-related ID fraud, the IRS has been taking extra steps to avoid depositing refunds onto suspicious prepaid cards. That's why the scam could involve a new twist.
After the money hits your account, a con artist might pose as a debt collection official working on behalf of the IRS. The crook might say the refund was deposited in error and they ask the taxpayer to forward the money to their collection agency.
Don't do it.
Or a robo call claims to be from the IRS and threatens the person with an arrest warrant unless refund money is turned over. Some calls talk about "blacklisting" the Social Security number of the real taxpayer — if the taxpayer doesn't follow the appropriate steps to return the refund cash.
Don't do it.
"This isn't your refund," Garcia said. "You're the victim of tax fraud. But don't complicate things by not returning that money to the IRS — not the scammers."
What should you do? Contact your bank. Don't plan to spend the money. Follow the proper steps to return the fraudulent refund to the IRS.
Some consumers have reported that their bank accounts ended up being frozen as banks try to deal with this odd criminal twist. Your account could have to be closed to prevent fraudsters from gaining access.
The IRS said taxpayers who receive an erroneous refund should contact the Automated Clearing House department of their bank. The bank would return the erroneous refund directly to the IRS.
The taxpayer should contact the IRS at 800-829-1040 for an individual filer or 800-829-4933 for a business.
You're going to want to file a Form 14039, Identity Theft Affidavit when you file your own tax return to state that you were a victim of a tax preparer data breach. Once a victimized taxpayer tries to file his or her own return electronically, they may fearthat their tax return will be rejected because a 2017 return bearing their Social Security number has already been filed.
Tax fraud remains a threat, even though the IRS said the number of tax returns with confirmed identity theft declined by 32% to 597,000 returns in 2017, compared with 883,000 returns in 2016.
A spokesperson from Intuit, the maker of TurboTax, said its fraud detection program includes providing suspicious activity reports to the IRS and validating Internet Protocol addresses to block high-risk transactions from suspect geographies.
But experts say cybercriminals are always developing new lines of attack, like the direct deposit scam. So if you're hit, it's important to take action.
The IRS outlines the steps to take to return an erroneous refund in its "Tax Topic Number 161 — Returning an Erroneous Refund." See www.irs.gov.
Paychecks will be fatter starting in February
IRS warns tax professionals: 'Don't take the bait' from scammers
Many times, scammers likely could try to use direct deposit. But some could have a fraudulent refund check sent to your home. They're hoping you cash it — and don't spend it — and then hand over the money. Or maybe they're planning to steal that check out of your mailbox.
The steps for returning an uncashed check include writing "Void" on the back of the check where you'd sign it. The IRS wants you to submit the check immediately but no later than 21 days to the appropriate IRS location listed online. The IRS lists 10 possible locations for where you'd mail that erroneous check.
The IRS mailing addresses to use based on the city — or the abbreviation for the city — listed on the erroneous check:
- ANDOVER – Internal Revenue Service, 310 Lowell Street, Andover MA 01810
- ATLANTA – Internal Revenue Service, 4800 Buford Highway, Chamblee GA 30341
- AUSTIN – Internal Revenue Service, 3651 South Interregional Highway 35, Austin TX 78741
- BRKHAVN – Internal Revenue Service, 5000 Corporate Ct., Holtsville NY 11742
- CNCNATI – Internal Revenue Service, 201 West Rivercenter Blvd., Covington KY 41011
- FRESNO – Internal Revenue Service, 5045 East Butler Avenue, Fresno CA 93727
- KANS CY – Internal Revenue Service, 333 W. Pershing Road, Kansas City MO 64108-4302
- MEMPHIS – Internal Revenue Service, 5333 Getwell Road, Memphis TN 38118
- OGDEN – Internal Revenue Service, 1973 Rulon White Blvd., Ogden UT 84201
- PHILA – Internal Revenue Service, 2970 Market St., Philadelphia PA 19104
You will want to include a note saying that you're returning an erroneous refund check and give a short reason.
And what if you've cashed an erroneous refund check?
You will need to send a personal check or money order to the IRS. Make sure to write on the check or money order: "Payment of Erroneous Refund" and the tax period for which the refund was issued.
If you don't act promptly to repay an erroneous refund, the IRS could charge interest on the money.
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