If you happen to notice an automatic deposit made in your bank account from the IRS or you get a refund check in the mail that you weren’t expecting, you are likely the victim of the latest tax scam.

On February 13th, the IRS released a warning to alert taxpayers to a fast growing new scam that uses stolen taxpayer’s information to fraudulently file taxes then deposit refunds into real bank accounts.

Once Deposit Is Made, The Criminals Make Contact

The IRS makes it clear that the criminals use a variety of tactics to get the fraudulent refund from the taxpayers. And, as the IRS points out the tactics are probably evolving, so you’ll want to stay alert.

In one version of the scam, 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.

In another version, the taxpayer who received the erroneous refund gets an 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.

Don’t Fall For It

There are legal ways to correct the situation. If you have been the recipient of an automatic deposit or a check, you will have to return the money to the IRS or risk owing the amount plus interest which grows on a daily basis. Follow the steps below as issued by the IRS.

How To Return Fake Refunds To The IRS

If the erroneous refund was a direct deposit:

• Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the IRS.
• Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.

If the erroneous refund was a paper check and hasn’t been cashed:

• Write “Void” in the endorsement section on the back of the check.
• Submit the check immediately to the appropriate IRS location listed below. The location is based on the city (possibly abbreviated) 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 stating, “Return of erroneous refund check because (and give a brief explanation of the reason for returning the refund check).”

If the erroneous refund was a paper check and you have cashed it:

• Submit a personal check, money order, etc., immediately to the appropriate IRS location listed below.
• If you no longer have access to a copy of the check, call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) (see telephone and local assistance for hours of operation) and explain to the IRS assistor that you need information to repay a cashed refund check.
• Write on the check/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).
• Include a brief explanation of the reason for returning the refund.
• Repaying an erroneous refund in this manner may result in interest due the IRS.

Have a question? Contact Barry Fowler.

Your comments are always welcome!