Tax Refund Fraud? It’s a Growing Problem

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Tax Refund Fraud? It’s a Growing Problem

By now many Americans have not only filed their taxes but also received the refunds they may have been owed. However an increasing number of taxpayers might not be so lucky as tax refund fraud has been claiming more and more victims in recent years.

Believe it or not a growing scam involves fraudsters filing your tax returns and stealing your refund. According to CNN Money the IRS caught over one million fraudulent returns in 2015 and blocked the issuance of almost $7 billion dollars in refunds from those returns. Additionally, in the first six weeks of the latest tax season, 42,000 refunds worth $227 million were discovered to be fraud.

How refund theft scams work

These scams can be the result of hacking that uncovers personal data such as your social security number. From there thieves can file your return and claim the refund. The only real way of knowing this has happened is by calling the IRS or being notified of the discrepancy when you go to file your own return.

One victim of such a scam is Cory Busse who says his information was stolen when a third-party vendor his employer used had their system hacked and data compromised. When he called, the IRS informed Busse that his social had indeed been used to file a return. As a result Busse was then told to submit written copies of his tax returns and that it would take up to six months to get the situation resolved and get him his refund (which he says could be a few thousand dollars).

Unfortunately this isn’t the only scam that the IRS is currently combating. Another fraud that’s been gaining popularity is thieves calling various citizens and claiming to be from the IRS. Typically the caller will tell victims that they owe taxes and face major consequences such as arrest or even deportation if they don’t pay immediately. While this has led to the myth that the IRS never makes calls it should be noted that they may actually call you but will not ask for personal or payment information over the phone.

Prevention

While there’s no 100% guarantee that you can prevent tax refund fraud from hitting you there are a few ways in which you can protect yourself from these scams. As another CNN Money article notes one of the best things to do is safeguard your computer with anti-virus software and firewalls as well as encrypt your personal information on all of your devices. Monitoring your credit will also help alert you if your identity has been stolen including possible refund fraud. Lastly be careful about the links you click in emails that look suspicious and never click a link or reply to an e-mail that claims to be from the IRS — another form of scamming.


With your refund in hand you might feel ready to just forget about your taxes until next April. Instead you may want to invest some of that refund into protecting your data and monitoring your credit activity so that you don’t become the victim of tax refund fraud. While it may seem like a longshot the increase of such scams in recent years is sadly worthy of some concern and could require some proactive attention on your part.

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Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

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