Don’t Get Caught Up in a Tax Return Scam!

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It’s tax season, and while that may mean you’re drowning in forms and paperwork, for scammers it means millions of taxpayers they can potentially dupe out of refunds or scare into making irrational moves. Here’s what you need to know about tax return scams and how to avoid them.

How the scams play out

In a tax return scam, a fraudster steals a taxpayer’s personal information and files a fake tax return on their behalf. The scammer will direct the refund to be deposited into the taxpayer’s checking account. After the refund is deposited, the scammer will call the victim, impersonating the IRS and claiming the refund was mistakenly inflated. They’ll instruct the victim to return the alleged extra funds via gift card or wire transfer. Of course, this money will go directly into the scammer’s pockets.

In another variation of a tax return scam, a fraudster steals a taxpayer’s personal information and files a fake tax return on their behalf, as described in the first scenario. However, instead of directing the refund to be deposited into the victim’s account, the scammer has the funds deposited into their own account. When the taxpayer tries to file a legitimate return, the IRS will inform them they’ve already filed one – and collected the refund.

Unfortunately, tax return scams are relatively easy to pull off. Scammers need only to get their hands onto a victim’s name, Social Security number and date of birth. All other information, including income and employment details, can be fabricated. Often, scammers get the information they need for the scam from employees who work at the same company as the target and are willing to sell information about their co-workers to fraudsters.

Protect yourself

Fortunately, there are steps you can take to limit your vulnerability to tax return scams. Here’s how to keep your money and your information safe this tax season:

File early. This gives scammers less time to use stolen information.
E-file with care. Only use a secure computer to file an electronic tax return. Do not use public Wi-Fi to e-file your taxes.
Keep your tax returns in a secure location. Remove your returns from your computer after you’ve filed, and store hard copies of all tax forms in a safe place.
Never download links or attachments from unverified sources. These may contain malware, which can infect your computer and deliver your information right into the scammer’s hands.
Never share personal information with an unknown contact over the phone or online. Personal information should always be kept personal.

It’s also important to be aware of the following information to help you identify possible scams:

Refund checks will never be deposited into a taxpayer’s account if they have not filed taxes. If a refund lands in your checking account and you know you haven’t yet filed taxes, you are likely the victim of a tax return scam.
The IRS never demands payment by a specific method. If you’re asked to wire money to the “IRS” or pay by gift card, you’re talking to a scammer.
The IRS only sends written notifications, they will never call anyone and ask for personal and account information over the phone.

Warning Signs of Tax-Related Identity Theft

You get a notice from the IRS that an online account has been created in your name, OR You get a notice from the IRS that your existing online account has been accessed or disabled when you took no action.
You get a notice from the IRS that you owe additional taxes, are subject to a refund offset, or that you have had collection actions taken against you for a year you did not file a tax return.
You get a letter from the IRS inquiring about a suspicious tax return that you did not file.
You can’t e-file your tax return because of a duplicate Social Security number.
You get a tax transcript in the mail that you did not request.
IRS records indicate that you received wages or other income from an employer you didn’t work for.

If you’ve been targeted

If you receive a phone call or letter from someone claiming to represent the IRS and informing you that you owe tax money, you can verify the claim by calling 1-800-829-1040. Emails allegedly sent by the IRS are scams, as the IRS does not reach out to taxpayers via email.

If you haven’t received your tax refund within one month of filing, you can check your refund’s status on the IRS webpage(link is external). If the site shows that your refund was issued but you haven’t received it, you may be the victim of a tax return scam and identity theft. Alert the IRS at 1-800-908-4490.

Stay alert this tax season and stay safe!