Income tax identity theft continues to be a major problem costing taxpayers in general billions of dollars each year and delaying refunds of victims of income tax identity theft by many months. However, due to the joint efforts of private sector tax preparers along with state and federal tax officials, instances of income tax identity theft have been dramatically reduced. Income tax identity theft occurs when an identity thief steals someone’s Social Security number and uses it to electronically file a phony income tax return and claim a refund based on a counterfeit W-2 filed by the identity thief.
Earlier this week, the IRS warned taxpayers and tax preparers about an ingenious new evolution in income tax identity theft that has recently been observed. In this new scam, the identity thieves use phishing emails to tax preparers to gain information about the tax returns of their clients. The identity thieves then file income tax returns on behalf of those clients using much of the same information contained in previous tax returns including information about dependents. In addition, they request the IRS to send the refund to the actual bank account of the victim so everything appears quite normal. But then is when the fun starts. The next step in the scam is that after the refund has been received, the victim receives a telephone call from the scammer posing as a collector for the IRS who tells the targeted victim that there was an error in the refund and that it must be wired back to the collector. The call may seem legitimate because the caller knows the victim’s Social Security number and the exact amount of the refund.
The IRS does not call taxpayers demanding repayment of refunds issued in error and they never demand that payments be wired so if you receive such a call, it is a scam. But what do you do if you become a victim of this scam and do end up having a bogus refund sent to your bank account? You should contact the Automated Clearing House (CH) department of your bank where the bogus refund was sent and instruct them to return the funds to the IRS and then call the IRS at 1-800-829-1040 and inform them what happened and that you are returning the direct deposit. This scam is also perpetrated by scammers with the refund being paid through a paper check, as well. If you receive such a check, you should send it back to the IRS without cashing it along with an explanation. If you have cashed the check you should call the IRS at 1-800-829-1040 and explain the situation. They will give you instructions for returning the payment.