Tax Refund Scams Are Making the Rounds

Tax Refund Scams Are Making the Rounds

As tax season comes to a close, AARP advises tax filers to be on the lookout for scams designed to steal refunds. 

According to AARP, prevention is the best way to avoid getting a tax return hijacked. If someone does file a false return in your name, the problem can be fixed, but expect any refund to be delayed.

Scammers have plenty of ways to commit crimes, but two favorite scams occur during tax time. The first is tax preparer fraud. Criminals set up shop as expert tax preparers and promise big refunds. For a fee, they will fill out a return with trumped-up tax deductions and credits, but when the refund rolls in, it goes right into their bank accounts, not yours.  

There are many warning signs that a tax preparer may be a fraud. They may refuse to sign the return or enter a Preparer Taxpayer Identification Number – the IRS requires both. And they may base their fee on a percentage of your refund or ask you to sign a blank form.  

The second type of tax scam involves identity theft where the scammer has a taxpayer’s Social Security number and other information and uses it to submit a return with the refund delivered to his or her bank account. This fraud usually is not discovered until the real taxpayer tries to file a return and the IRS computers kick it back because a return under that name has already been filed.

No matter who prepares the tax return, the taxpayer ultimately is responsible for its accuracy. According to the IRS, the best way to prevent identity theft tax returns is to sign up for an Identity Protection Personal Identification Number (IP-PIN) available through IRS.gov. Once a taxpayer is part of the program, the IRS will provide a new IP-PIN each year to be used alongside the taxpayer’s Social Security number when filing a return. This is similar to a two-factor verification process that many financial institutions use as an extra layer of protection.

Another easy way to thwart identity theft tax fraud is to file early. If a taxpayer files a return before the scammer does, the phony return will be rejected.

Should you get scammed, act quickly. Call the police immediately and fill out IRS forms 14157 and 14157-A. And never ignore IRS notifications. Official notifications from the IRS always come by letter, never by telephone, email or social media. If suspicious, contact the IRS at 800-908-4490. And try to be patient. According to the IRS, resolving identity theft typically takes 120 days.

For more helpful tips on fraud, visit www.aarp.org/FraudWatchNetwork.

For media inquiries: Cathleen Simlar, csimlar@aarp.org.