Just imagine logging in to your bank account and discovering Uncle Sam has generously deposited a few thousand dollars. It’s a tax refund you weren’t even expecting!
In the words of the great Admiral Ackbar, “It’s a trap!”
According to an article at CBS Money Watch, the IRS is warning people that tax refund scams are on the rise this year. Just the good news we needed, right?
How These Tax Scams Work
Thanks to a few tax preparation locations that were hacked, the bad guys have thousands of people’s personal information. They use this information to file fraudulent tax forms that bring back nice tax refunds.
That refund, however, goes to the person whose name and address is on the form. That means if a fraudulent claim is made in your name, the money will come to you via direct deposit or check.
Yay! No, not really.
Once you get your monetary surprise, the bad guys will give you a call claiming to be the IRS or a debt collection agency retrieving the money for the IRS. Or you may get a recorded message accusing you of tax fraud and threatening arrest if you don’t call a phone number to clear it all up.
The IRS is not calling anyone, but guess what: It does want that money back. If you get a surprise check or direct deposit from the IRS, you need to return that money. If it’s a direct deposit, talk to your bank, and it can send it directly back to the IRS. You may also want to close that account since it’s obviously been compromised.
If you receive a check, write “VOID” across it and send it back as soon as you can with a completed Form 14039, which is the identity theft affidavit. If you already cashed or deposited that check, send a personal or cashier’s check for the amount to the IRS.
If you have more questions on what to do if your identity is compromised, the IRS has a Guide to Identity Theft available.
As painful as it may be to get surprise funds and then immediately return them, it would be far worse to try to keep the money. Ill-gotten gains will only do bad things.
One easy step to avoid getting scammed is to file your taxes early. If your legit taxes are filed, it makes successful false filing far less likely. Once you have the W-2s, 1099s and other forms you need to file, get organized and get those taxes done. It could save you a lot of headaches.
Tyler Omoth is a senior writer at The Penny Hoarder who loves soaking up the sun and finding creative ways to help others. Catch him on Twitter at @Tyomoth.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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