The Internal Revenue Service is warning 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.
These criminals have a new twist on an old scam. After stealing taxpayer data 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
Because this is a peak season for filing tax returns, taxpayers who file electronically may find that their tax return will be rejected because a return bearing their Social Security number is already on file. If that’s the case, the taxpayer may be the victim of identity theft.
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:
- 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).”
The erroneous refund was a paper check and you have cashed it: