Tax Refund Fraud

Tax-related identity theft is when criminals steal people’s Social Security numbers and then file false returns as though they were those people.

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The crooks typically claim a low income with high deductions, and they usually file electronically. Then when you go to file your return, the Internal Revenue Service (IRS) rejects it, because somebody else has already filed with your Social Security number.

The whole mess can take months to straighten out.

But it turns out there’s an easy solution: prevention. You can get an Identity Protection PIN (IP PIN) from the IRS before you file your taxes.

The IP PIN is a six-digit number that must be used on a tax return, in addition to a Social Security number, to verify the identity of a taxpayer. Note that, once you opt in to the program, you can’t opt out. If you qualify, you will get a new PIN each year through the mail.

W-2 Email Phishing Scam
The IRS says crooks have been running a successful W-2 email phishing scam operation that has tricked major companies into turning over copies of W-2 forms for all their employees.

This is actually a CEO impostor scam, where a criminal or criminals pretend to be top company brass and ask payroll or human resources for sensitive W-2 data.

The criminals then use that information to file bogus tax returns or sell the breached data online to other criminals, according to an IRS warning.

Ghost Tax Preparers
The IRS warns of another scam that involves paid tax preparers who don’t sign off when they prepare your tax return.

Any tax preparer who fails to sign and include their valid Preparer Tax Identification Number is violating the law. If your return is missing a signature or the preparer’s ID number, it’s a red flag that they “may be looking to make a fast buck by promising a big refund or charging fees based on the size of the refund,” according to the IRS.

Other signs you may be dealing with a “ghost” preparer include:

  • Asking for cash payment without providing a receipt
  • Falsifying income info on your return to get tax credits
  • Making up fake deductions to boost the size of your refund
  • Having clients’ direct deposit refunds sent to their own bank accounts

Generic IRS Phone Scam
The premise here is that you have a surprise tax bill you need to pay immediately to the IRS or you’ll be arrested. The scammers use phone spoofing to make their number come up on your caller ID as “IRS.” And they may already have the last four digits of your Social Security number. Don’t be fooled by that.

Here are some of their other tactics to watch out for:

  • They use common names and fake IRS badge numbers
  • They send emails to support their scam (sometimes with what looks like the IRS logo)
  • They call a second time claiming to be the police or Department of Motor Vehicles, and the caller ID again supports their claim

You’re told to submit payment either by wire or by prepaid debit card. Know this: The IRS will never contact you by phone asking for money. The agency communicates exclusively through snail mail.

IRS iTunes Scam
USA Today reported a 20-year-old college student was duped by someone claiming to represent the IRS into putting $500 on three separate iTunes cards and $262 on a fourth, all paid for with her debit card.

Why would the student do this? Because the caller threatened her with arrest.

With the iTunes gift card scam, the thieves ask you to put money on some kind of gift card and then read them the 16-digit code off the back. That allows them to access the cash quickly in a way that’s untraceable in most cases.

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