Every year criminals try to get away with committing tax fraud and this year is no different. There’s a new twist to an old scam, erroneous tax refunds.
There are different versions of this scam. Once the criminal has taken possession of the information and had the refund delivered to the taxpayer, they will do one of two things: pose as a collection agency acting on behalf of the IRS OR pre-record an automated message threatening the taxpayer on behalf of the IRS with felony charges. In either scenario the taxpayer, victim of this scam, will be given instructions on how to return the “erroneous” refund to the criminals posing as the IRS.
Tax season is the peak season for this scam, and usually criminals will beat the taxpayer in filing taxes. This leads to calls from the IRS, when a taxpayer wants to file their taxes, saying that the tax return corresponding to the Social Security Number has already been filed. If this occurs the IRS has steps that a taxpayer should follow. Additional information can be found in the IRS publication, Taxpayer Guide to Identity Theft.
If your identity has been stolen, the Federal Trade Commission recommends the following:
– File a complaint with the FTC at gov
– Contact one of the three major credit bureaus to place a fraud alert on your credit records.
– Equifax, Experian or Transunion
– Contacting your bank and other financial institutions where you had accounts or new accounts could have been created.
If your SSN is compromised, and you are aware or suspect that you’re victim of identity theft, the IRS recommends the following:
– Respond immediately to any notice from the IRS
– Complete IRS form 14039, Identity Theft Affidavit, if your SSN has been shown to be duplicate upon filing and/or you have been instructed to do so. Once you have filled out the affidavit, attach it to your return and mail it according to IRS instructions.
Any taxpayer unable to electronically file must file a paper tax return, with the Identity Theft Affidavit attached stating a tax breach.
If you do receive an erroneous tax refund, and you’re aware you have not filed your taxes, here is how to return it to the IRS.
If the refund was a direct deposit:
– Contact your bank/financial institution’s Automated Clearing House department, and have them return the refund to the IRS.
– Call the IRS at 800-829-1040 to explain the reason for the refund return.
If the refund was a paper check, and had not been cashed:
– Write VOID on the endorsement part of the check.
– Submit check, immediately, to an appropriate IRS location. Do not staple, bend or otherwise alter check.
– Include a note, when submitting, stating, “Return of Erroneous Refund Check because …”
If the refund was a paper check, and has been cashed.
– Submit a personal check, money order, etc., immediately to an appropriate IRS location for the amount received and written out to: Payment of Erroneous Refund, tax period in which refund was issued, and your SSN, EIN or ITIN.
– If you no longer have a copy of the check, contact the IRS at 800-839-1040 and explain the reason for return and why you need the information.
– Include with your returned check or money order the reason why you are returning it.
– Repaying the IRS in this manner may result in owing the IRS interest.
If you receive an erroneous refund, it is important to follow these steps and possibly close any accounts that could have been compromised.