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Scam Alert: IRS Urges Taxpayers to Watch Out for Erroneous Refunds; Beware of Fake Calls to Return Money to a Collection Agency

Posted By Lisa Novack, IRS, Friday, February 16, 2018

IR-2018-27, Feb. 13, 2018

WASHINGTON — The Internal Revenue Service today warned taxpayers of a quickly growing scam involving erroneous tax refunds being deposited into their bank accounts. The IRS also offered a step-by-step explanation for how to return the funds and avoid being scammed.

Following up on a Security Summit alert issued Feb. 2, the IRS issued this additional warning about the new scheme after discovering more tax practitioners’ computer files have been breached. In addition, the number of potential taxpayer victims jumped from a few hundred to several thousand in just days. The IRS Criminal Investigation division continues its investigation into the scope and breadth of this scheme.

These criminals have a new twist on an old scam. After stealing client data from tax professionals and filing fraudulent tax returns, these criminals use the taxpayers' real bank accounts for the deposit.

Thieves are then using various tactics to reclaim the refund from the taxpayers, and their versions of the scam may continue to evolve.

Different Versions of the Scam

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.

As it did last week, the IRS repeated its call for tax professionals to step up security of sensitive client tax and financial files.

The IRS urged taxpayers to follow established procedures for returning an erroneous refund to the agency. The IRS also encouraged taxpayers to discuss the issue with their financial institutions because there may be a need to close bank accounts. Taxpayers receiving erroneous refunds also should contact their tax preparers immediately.

Because this is a peak season for filing tax returns, taxpayers who file electronically may find that their tax return will reject because a return bearing their Social Security number is already on file. If that’s the case, taxpayers should follow the steps outlined in the Taxpayer Guide to Identity Theft. Taxpayers unable to file electronically should mail a paper tax return along with Form 14039, Identity Theft Affidavit, stating they were victims of a tax preparer data breach.

Here are the official ways to return an erroneous refund to the IRS.

Taxpayers who receive the refunds should follow the steps outlined by Tax Topic Number 161 - Returning an Erroneous Refund. The tax topic contains full details, including mailing addresses should there be a need to return paper checks. By law, interest may accrue on erroneous refunds.

If the erroneous refund was a direct deposit:

  1. 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.
  2. 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:

  1. Write "Void" in the endorsement section on the back of the check.
  2. 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.
  3. Don't staple, bend, or paper clip the check.
  4. Include a note stating, "Return of erroneous refund check because (and give a brief explanation of the reason for returning the refund check)."

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.

IRS mailing addresses for returning paper checks

For your paper refund check, here are the IRS mailing addresses to use based on the city (possibly abbreviated). These cities are located on the check’s bottom text line in front of the words TAX REFUND:

  • 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

 

To view the original article, please visit the IRS website here.

Tags:  IRS  Scam  Security  Small Business  Taxes 

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Another Fraud Using the IRS

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Friday, January 22, 2016

 This is another spoof attempting to gain information about you or to instill malware on your computer to obtain your passwords and credit card information. Everyone that works is receiving W2's and 1099's this time of year as required by the IRS to report your income.  Don't fall for the message that may read as follows: 

 

"I have enclose the W2's return's document for your review as instructed by my client. Click here (  VIRUS in Form of a PDF Document )      to view all document in one folder.

I'll await your response if you need more details.

Thanks"

This is fraud!

Tags:  fraud  IRS  scam  Taxes 

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AARP BULLETIN NEW SCAMS TO AVOID

Posted By George (Clint) Frederick CPA PLLC, George Frederick CPA PLLC, Sunday, January 10, 2016

 

Fraud is rampant in our society today.  Con artist are lurking to grab your cash through deceptive means.  The January – February 201 issue of the AARP Bulletin titled their article NEW Scams to avoid, however these swindles have been around for quite a while.  In fact, I have personally experienced but luckily did not fall victim to the frauds described.

TECH SUPPORT
according to Microsoft one of the biggest frauds, involving some 3.3 million people and $1.5 billion in revenue to the scammers.  You receive a call from someone purporting to be a technician from Microsoft or Windows.  They tell to go to a particular website and follow the instructions.  A screen appears telling you your computer has problems but in reality downloads malware the steals your information.  A variation of the swindle is an offer to fix your computer for a fee, when in reality you do not have problems. 

  • SOLUTION – upgrade to Microsoft 10 or the latest version of your operating system with the updates.  Another method is to purchase a long-term maintenance contract from the computer manufacturer and obtain tech support directly from them. 


SILENT CALLS

are generated by a computer. The computer records numbers when someone answers.  Fraudsters use the numbers as potential targets for theft. 

  • SOLUTION – Install caller ID and do not answer unless you recognize the caller.


IRS IMPOSTER

is still going strong.  I reported on the fraud before when they called me.  After I published my article, it happened to me again.  According to Amy Nofziger with the AARP Foundation, the fraud is getting more and more sophisticated.  The IRS imposter will tell you to call another number immediately, or you will be sued, your bank account garnished, or other threats. 

  • SOLUTION – Hang up! The IRS will not call you; they will use the postal service to contact you.  Do not return the call.  If in doubt, call the IRS at 800 829 1040.


CANCER CHARITIES

S
the Federal Trade Commission stated four national cancer charities were responsible for defrauding consumers of $187 million. These charities are Cancer Fund of America, Cancer Support Services, the Children’s Cancer Fund of America, and the Breast Cancer Society.  Miss Pennsylvania claimed she had cancer, shaved her head and staged Bingo for Brandi raising tens of thousands in sympathetic support. She was arrested last August.

  • SOLUTION – before contributing to any charity check out its rating on charitynavigator.org. I checked this out.  It lists the charity, lists a ‘donor advisory’ then tells about the complaints.   Be wary of giving cash or giving out your credit card to solicitations and be wary of on-line sites like gofundme.com.



CHIP CARD

Banks and credit card companies are in the process of replacing credit cards with a new chip that is more secure.  Some con artists are impersonating the banks and credit card companies by sending emails requesting financial information, or requesting that you go to a specific link where that installs malware on your computer.  The emails look official and are hard to distinguish from the real company.

  • SOLUTION – call the number on the back of your credit card.  No credit card company will call you to verify personal information.   

Always be skeptical.  Ask questions, and trust your intuition.                    

Tags:  fraud  IRS  phishing  scam  tax 

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IRS Repeats Warning About Phone Scams

Posted By Rhette Baughman, Arizona Small Business Association, Wednesday, August 13, 2014

WASHINGTON — The Internal Revenue Service and the Treasury Inspector General for Tax Administration continue to hear from taxpayers who have received unsolicited calls from individuals demanding payment while fraudulently claiming to be from the IRS.
 
Based on the 90,000 complaints that TIGTA has received through its telephone hotline, to date, TIGTA has identified approximately 1,100 victims who have lost an estimated $5 million from these scams. 

"There are clear warning signs about these scams, which continue at high levels throughout the nation,” said IRS Commissioner John Koskinen. “Taxpayers should remember their first contact with the IRS will not be a call from out of the blue, but through official correspondence sent through the mail. A big red flag for these scams are angry, threatening calls from people who say they are from the IRS and urging immediate payment. This is not how we operate. People should hang up immediately and contact TIGTA or the IRS.”

Additionally, it is important for taxpayers to know that the IRS:

  • Never asks for credit card, debit card or prepaid card information over the telephone.

  • Never insists that taxpayers use a specific payment method to pay tax obligations

  • Never requests immediate payment over the telephone and will not take enforcement action immediately following a phone conversation. Taxpayers usually receive prior notification of IRS enforcement action involving IRS tax liens or levies. 

Potential phone scam victims may be told that they owe money that must be paid immediately to the IRS or they are entitled to big refunds. When unsuccessful the first time, sometimes phone scammers call back trying a new strategy.

Other characteristics of these scams include:

  • Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.

  • Scammers may be able to recite the last four digits of a victim’s Social Security number.

  • Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.

  • Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.

  • Victims hear background noise of other calls being conducted to mimic a call site.

  • After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

If you get a phone call from someone claiming to be from the IRS, here’s what you should do:

  • If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040. The IRS employees at that line can help you with a payment issue, if there really is such an issue.

  • If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then call and report the incident to TIGTA at 1.800.366.4484.

  • If you’ve been targeted by this scam, you should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add "IRS Telephone Scam" to the comments of your complaint.

Taxpayers should be aware that there are other unrelated scams (such as a lottery sweepstakes) and solicitations (such as debt relief) that fraudulently claim to be from the IRS.

The IRS encourages taxpayers to be vigilant against phone and email scams that use the IRS as a lure. The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS also does not ask for PINs, passwords or similar confidential access information for credit card, bank or other financial accounts. Recipients should not open any attachments or click on any links contained in the message. Instead, forward the e-mail to phishing@irs.gov.

For more information or to report a scam, go to www.irs.gov and type "scam" in the search box.

More information on how to report phishing scams involving the IRS is available on the genuine IRS website, IRS.gov.

Tags:  IRS  phishing  scam 

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