Updated July 11, 2019. Tax scams mutate and multiply this time of year. Consider thieves' latest modus operandi: Depositing phony tax returns into your bank account in the hope you'll "return" the money to them when posing as collector on the phone. While it helps to know the tell-tale signs of a tax scam, there's no way to guarantee you won't become a victim. After all, anyone who had their Social Security numbers compromised in data breach is vulnerable to taxpayer identity theft (when a thief uses those digits to file a return in your name and nab a refund). The best way to avoid fraud is to file your taxes ASAP. But, given no one's immune, here's what to do in the more common tax scam scenarios.
How to deal with a stolen refund
If you find a thief has beaten you to your refund check when your e-filed return gets rejected:
- File via paper and include the IRS's Identity Theft Affidavit (Form 14039). That tells the IRS you were a taxpayer fraud victim and prompts them to work on your case. Resolutions can take anywhere between 120 and 180 days. You can call the Taxpayer Advocate Service at 1-877-777-4778, if you're case is taking forever to resolve and you're having financial difficulties.
- File a police report on the incident.
- File a compliant with the Federal Trade Commission (FTC). Formal reports are instrumental in resolving issues that arise as a result of the fraud.
- Place a fraud alert or consider a credit freeze with the three major credit bureaus (Equifax, Experian and TransUnion) to protect yourself from more fraud.
How to return a phony refund
If the refund hits your bank account:
- Call the Automated Clearing House department of your bank to have the money returned to the IRS.
- Call the IRS to let them know why you're returning the money. You can reach them at at 1-800-829-1040. Call 1-800-829-4933 if you're a business.
If the refund arrives as a check:
- Write "VOID" in the endorsement section on its back. (Learn more about how to void a check.)
- Send the check to the appropriate IRS office ASAP. (Erroneous refunds can accrue interest.) That location is based on the city written on the bottom of the check. You can find the full mailing addresses on the IRS website.
- Don't staple, bend or paper clip the fraudulent refund.
- Do write a note stating "return of erroneous refund check because [insert reason here]."
If the refund arrives as a check and you cash it:
- Send a personal check for the refund amount to the appropriate IRS office.
- Write "Payment of Erroneous Refund," the applicable tax period and your Social Security or taxpayer identification number on the check, along with a short explanation as to why you're returning it.
- If you don't have access to a copy of the check, call the IRS for help (same numbers as above).
If you get a call from an 'IRS agent'
- Don't turn over any personal information.
- Ask for the purported agent's name, badge number, call back number and caller ID.
- Contact the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484 to determine if the caller is an IRS employee and has a legitimate reason for calling you.
If you see something, say something!
If you encounter something suspicious during the tax season, report it to the IRS. You might not have fallen for that phony TurboTax email or pay-your-taxes-by-iTune-gift-card line, but someone else might. Keep the IRS in the loop about a scammer's tactics helps so it can get the word out to other taxpayers. You can report phishing, phone scams, fake charities and more to TIGTA or to the IRS at firstname.lastname@example.org.
Haven't paid Uncle Sam just yet? We've got a guide to filing your taxes in 2018 right here.