Look Out for Tax Refund Fraud
The Internal Revenue Service expects individual taxpayers to file more than 150 million returns this year. If prior-year statistics hold steady, over 70 percent of filers will get a refund. That’s the good news. But scammers are still on the prowl, constantly devising new ways to steal your money — including your tax refund.
How does a tax refund scam work?
Thieves may get information from your W-2 form and use it to file a fraudulent return in your name. How? By installing malicious software (malware) on your computer or tricking human resource staff at your company into divulging personal data.
In a new twist on an old scam, a thief may direct the IRS to deposit the tax refund into your account. By using real client bank account information, they make it harder to identify fraudulently filed returns and hope to remain hidden from the prying eyes of investigators.
Typically, after the refund is deposited to your account, the scam goes into overdrive.
The thief initiates a phone call. Posing as an IRS or law enforcement official, they claim the refund was deposited in error. The thief demands that you return the refund to a collection agency, an account that’s actually a front for the thief’s operation.
Follow these guidelines to protect yourself:
File early (or as soon as possible). If your return is already in the IRS database, a scammer’s phony filing won’t be accepted.
Beware of phone calls or emails claiming to be the IRS. The IRS will contact you via regular mail before initiating any contact by phone or email. Also, the IRS will never demand that you pay by wire transfer, prepaid debit cards, or other specific payment methods. Nor will they threaten to contact local police if you don’t pay right away.
Request an IP PIN. This one-time use Identity Protection PIN (IP PIN) is issued by the IRS and can be entered on your tax return as an additional layer of protection. Those whose identities have been compromised are automatically issued a IP PIN, but anyone can request one. Apply for an Identity Protection Personal Information Number (IP PIN).