The IRS has a new warning about fake tax refunds being deposited into the bank accounts of taxpayers. Most of the taxpayers being targeted in this scam likely had their client data stolen from tax professionals earlier this tax season.
IRS: Criminals give fake refunds then ask for them back
In early February, the IRS noticed a trend of security breaches among tax professionals and told CPAs and other tax pros to make sure their client databases are locked down securely.
But the compromised client info that did make it out has given rise to a fast-moving scam where criminals deposit fake refund checks into your real account and then ask for the money back.
Two variants of this scam has so far emerged. In one, the criminals pretend to be debt collection agency officials working for the IRS and trying to collect a refund that was deposited in error.
In a second variation, people are getting robocalls that threaten arrest and a “blacklisting” of the taxpayer’s Social Security number if they don’t return the erroneous refund.
The IRS says instances this evolving scam have skyrocketed from several hundred to several thousand in just days!
Listen to Clark talk about this scam on the Clark Howard Show podcast
Keep in mind that you may have to close your bank account if you fall victim to this scam. Contact your financial institution for further details. And you also should contact your tax preparer immediately and let them know what’s happened.
Meanwhile, as a remind the IRS has established protocols to follow if you ever have to return a refund for any reason:
For direct deposit
- Call your bank or credit union. Ask for the Automated Clearing House (ACH) department of the financial institution. Then instruct them return the refund to the IRS.
- Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) with a reason about why the direct deposit is being returned.
For paper checks that haven’t been cashed
- Void the endorsement section on the back of the check.
- Submit the check immediately to the appropriate IRS location (see below). You can find the location based on the abbreviated city name on the bottom text line in front of the words TAX REFUND on your refund check.
- Don’t staple, bend or paper clip the check.
- Include a note that reads, “Return of erroneous refund check because (brief explanation about why you’re returning the refund check).”
For paper checks that have been cashed
- Write a check or money for the full amount to be returned to the IRS and submit it to the appropriate location.
- Call the IRS at 800-829-1040 (individual) or 800-829-4933 (business) if you no longer have access to a copy of the check. Tell the IRS assistor that you need info to repay a cashed refund check.
- Write the following info on your check or money order: Payment of Erroneous Refund, the tax period for which the refund was issued and your taxpayer identification number (Social Security number, employer identification number or individual taxpayer identification number).
- Explain why the refund is being returned. Know that by law, you are responsible for interest that accrues on erroneous refunds.
IRS mailing addresses for returning paper checks
If you have a paper refund check to return, use these IRS mailing addresses. Note the abbreviations where applicable.
- ANDOVER – Internal Revenue Service, 310 Lowell Street, Andover MA 01810
- ATLANTA – Internal Revenue Service, 4800 Buford Highway, Chamblee GA 30341
- AUSTIN – Internal Revenue Service, 3651 South Interregional Highway 35, Austin TX 78741
- BRKHAVN – Internal Revenue Service, 5000 Corporate Ct., Holtsville NY 11742
- CNCNATI – Internal Revenue Service, 201 West Rivercenter Blvd., Covington KY 41011
- FRESNO – Internal Revenue Service, 5045 East Butler Avenue, Fresno CA 93727
- KANS CY – Internal Revenue Service, 333 W. Pershing Road, Kansas City MO 64108-4302
- MEMPHIS – Internal Revenue Service, 5333 Getwell Road, Memphis TN 38118
- OGDEN – Internal Revenue Service, 1973 Rulon White Blvd., Ogden UT 84201
- PHILA – Internal Revenue Service, 2970 Market St., Philadelphia PA 19104
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