It’s tax season and a new scam involving stolen data from tax professionals, fraudulent tax filings, and erroneous checking account deposits has law enforcement and the Internal Revenue Service (IRS) on high alert.
Here’s how the scam works and what to do if a mysterious tax refund appears in your checking account or mailbox.
Criminals use data they’ve stolen from tax professionals, including taxpayers’ names, addresses, banking information, and social security numbers. Then they file a phony tax return, resulting in a tax refund deposit into a taxpayer’s legitimate checking account.
This is when the criminals make contact with the taxpayer, using various tactics to reclaim the refund.
One tactic includes posing as a debt collection agency acting on behalf of the IRS and requesting that the taxpayer forward the money to the collection agency.
Another tactic takes a spin on the automated call scam with a recorded voice threatening the taxpayer with criminal action and providing a “case number” and telephone number to assist in returning the money.
The scams work if the taxpayer follows through with the criminals’ demands before filing his or her own legitimate return. When the legitimate return is filed, the taxpayer/victim receives notice from the IRS that a tax return has already been filed for the year and a refund issued, which, by then, is cash in the scammers’ pockets.
If you receive a tax refund for a return you haven’t filed, here’s what to do:
If the refund was direct deposited:
- Contact your financial institution where the direct deposit was received and have them return the refund to the IRS.
- Call the IRS’s toll-free number at 800-829-1040 (individual) or 800-829-4933 (business) and explain why you’re returning the refund.
If the refund was issued by check and you haven’t cashed it:
- Write “VOID” in the endorsement section on the back of the check.
- Do not staple, bend or paper clip the check.
- Include a note stating, “Return of erroneous refund check because [give a brief explanation why you’re returning it).”
- Mail the check immediately to the appropriate IRS location (see list 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.
If you have cashed the refund check:
- 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) and explain to the IRS that you need information to repay a cashed erroneous refund check.
- Write on the check/money order “Payment of Erroneous Refund” and include the tax period the refund was issued, and your taxpayer ID number (SSN, EIN, or individual taxpayer ID number).
- Include a brief explanation why you’re returning the refund.
- Submit a personal check, money order, bank check, etc. in the erroneous amount immediately to the IRS (see location list below).
Besides following these steps, contact your tax preparer immediately, as well as your financial institution, and inform them of the breach. Note that by law, interest may accrue on erroneous refunds, which will be due to the IRS.
If you’ve filed your return with the IRS electronically and your return is rejected because a return with your taxpayer ID is already in their system, go to the IRS’s Taxpayer Guide to Identity Theft and follow the procedure they’ve outlined within. If you’re unable to file electronically, mail a paper tax return along with Form 14039, Identity Theft Affidavit (included in the above link), and let the IRS know you were the victim of a data breach.
An important takeaway here: the IRS initiates contact with taxpayers through the mail, not through a phone call. If you receive a telephone call from someone purporting to be from the IRS or handling IRS business, the call is most likely a scam. Hang up, and if you have any question about your return, call the IRS directly.
IRS mailing addresses
For your paper refund check, here are the IRS mailing addresses to use based on the city (possibly abbreviated). These cities are located on the check’s bottom text line in front of the words TAX REFUND:
- 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
If you’re a Hanscom FCU member and notice an erroneous deposit from the IRS in your checking account, immediately contact us at 800-656-4328 or stop by your local branch.
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