Weekly Column: Tax Scam Warnings

Enactment of the Tax Cuts and Jobs Act is resulting in higher take home pay for American workers through tax rate reductions, bonuses and wage increases.  Tax reform also generates long-term economic benefits from increased business investment, productivity and jobs.  As these benefits reach more American households, we must also make sure that taxpayers keep more of their hard-earned income by guarding against tax season scams.

The Internal Revenue Service (IRS) is warning taxpayers about a widespread scam in which thieves are stealing taxpayer data to file fraudulent tax returns, having the tax refunds deposited into the taxpayers’ existing bank accounts and then using scare tactics to take those fraudulent returns from taxpayers.  The IRS has released multiple warnings about this particular scam because the number of potential taxpayer victims have jumped significantly.  The IRS warns that thieves may be altering their tactics for stealing the refunds, but the agency describes two versions of the scam: 

1)    “criminals posing as debt collection agency officials acting on behalf of the IRS contacted the taxpayers to say a refund was deposited in error, and they asked the taxpayers to forward the money to their collection agency;” and

2)    “the taxpayer who received the erroneous refund gets and automated call with a recorded voice saying he is from the IRS and threatens the taxpayer with criminal fraud charges, an arrest warrant and a ‘blacklisting’ of their Social Security Number.  The recorded voice gives the taxpayer a case number and a telephone number to call to return the refund.”    

The IRS has established steps for taxpayers to return fraudulent refunds that include contacting the Automated Clearing House department of the bank where the direct deposit was received and having the bank return the refund to the IRS and calling the IRS at 800-829-1040 for individuals and 800-829-4933 for businesses to explain why the direct deposit is being returned.  Steps and addresses are also provided for returning erroneous refunds from paper checks and funds from checks that have already been cashed.  The tax agency has also encouraged victims of this scam to discuss the concern with their banks “because there may be a need to close bank accounts.”

The IRS has also posted information on its website, www.irs.gov, about other common tax scams that include IRS-impersonation telephone scams; scams targeting tax professionals; email, phishing and malware schemes; fraudsters posing as the Taxpayer Advocacy Panel; and other scams.  The IRS also provides information to try to help taxpayers know when it is an actual IRS employee contacting them cautioning that, “the IRS does not call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer.  Generally, the IRS will first mail a bill to any taxpayer who owes taxes.”

The hope is that the simplification provided through the enacted tax reform will help make it not only easier for taxpayers to file tax returns, but also help make fraud more detectable and preventable.  I am trying to help get word out about tax scams in the hope that that more taxpayers are not victimized by these and other tax scams and that they can hang onto more of their hard-earned income. 

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