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IRS Warns Taxpayers about Tax Refund Scam

The Internal Revenue Service (IRS) is warning taxpayers of a growing scam targeting tax preparers.

Scammers steal sensitive client data from tax preparers and use it to file fraudulent tax returns. The tax refunds are then deposited into taxpayers’ real bank accounts. The scammers will follow up by calling and posing as debt collection agency representatives, informing taxpayers of a refund deposited in error and asking them return the money.

If you file your taxes electronically, and the return is rejected because one has already been filed with your Social Security number, you may be a victim of this tax preparer data breach.The IRS has outlined the steps you need to take if you are affected by the scam and need to return an erroneous tax refund to them:

If the erroneous refund was via 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 representative 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.

For the nearest IRS office to return paper checks, visit the IRS website.