WASHINGTON — The Internal Revenue Service is warning taxpayers of a growing scam involving erroneous tax refunds being deposited into their bank accounts.
The IRS issued the warning after discovering that more tax preparers’ computer files had been breached, and the number of potential taxpayer victims jumped from a few hundred to several thousand in just days.
In a new twist on an old scam, the thieves steal client data from tax professionals, file fraudulent tax returns, then use the taxpayers’ real bank accounts for the deposit. They then use various tactics to reclaim the refund from the taxpayers–such as posing as the IRS or debt collectors and demanding the return of the fraudulent tax refund.
In one version, the taxpayer who received the erroneous refund gets an automated call with a recorded voice saying 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 recorded voice gives the taxpayer a case number and a telephone number to call to return the refund.
Remember, the IRS won’t call you, they’ll send a letter first.
The IRS urged taxpayers to follow established procedures for returning an erroneous refund to the agency. Taxpayers should also contact their financial institutions because they may need to close bank accounts. Taxpayers receiving erroneous refunds also should contact their tax preparers immediately.
Because this is a peak season for filing tax returns, taxpayers who file electronically may find that their tax return will reject because a return bearing their Social Security number is already on file. If that’s the case, taxpayers should follow the steps outlined in the Taxpayer Guide to Identity Theft. Taxpayers unable to file electronically should mail a paper tax return along with Form 14039, Identity Theft Affidavit, stating they were victims of a tax preparer data breach.
Here are the official ways to return an erroneous refund to the IRS.
Follow the steps outlined by Tax Topic Number 161 – Returning an Erroneous Refund. The tax topic contains full details, including mailing addresses should there be a need to return paper checks. By law, interest may accrue on erroneous refunds.
If the erroneous refund was a direct deposit:
Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the IRS.
Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.
If the erroneous refund was a paper check and hasn’t been cashed:
Write “Void” in the endorsement section on the back of the check.
Submit the check immediately to the appropriate IRS location listed below. The location is based on the city (possibly abbreviated) on the bottom text line in front of the words TAX REFUND on your refund check.
Don’t staple, bend, or paper clip the check.
Include a note stating, “Return of erroneous refund check because (and give a brief explanation of the reason for returning the refund check).”
The erroneous refund was a paper check and you have cashed it:
Submit a personal check, money order, etc., immediately to the IRS (West Coast location listed below).
If you no longer have access to a copy of the check, call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) (see telephone and local assistance for hours of operation) and explain to the IRS assistor that you need information to repay a cashed refund check.
Write on the check/money order: Payment of Erroneous Refund, the tax period for which the refund was issued, and your taxpayer identification number (social security number, employer identification number, or individual taxpayer identification number).
Include a brief explanation of the reason for returning the refund.
Repaying an erroneous refund in this manner may result in interest due the IRS.