Beware of tax refund cyber-crooks

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by Dennis Dalman

As tax season gets busier, cyber-criminals get busier, too, working their identity-theft scams to get people’s tax-refund money.

Local law enforcement is warning people to be alert to the latest tax scam. The first sign something crooked is happening is when surprised taxpayers notice a tax refund amount in their bank balances, usually one they didn’t even file for yet. The crooks try to file the erroneous tax filing well before their victims do. And that is why in the coming weeks, people should be on their guard.

Other than the surprise tax return in the bank from the U.S. Treasury Department, a sure giveaway that a scam is afoot is that the Internal Revenue Service never ever calls people on the telephone. If anyone gets a call supposedly from the IRS or a collection agency for the IRS, they should know at once it’s a scam.

In the past few years, there have been “lots of” incidents concerning attempts at identity theft in Sartell, said Sartell Police investigator Tim Broda. “One year, we made an arrest and the car was filled with stolen mail.”

Most perpetrators of thefts from mail boxes, Broda explained, scour the mail items, seeking personal financial information about the recipients. They also phish for that information via computers and email messages.

As far as scams involving tax returns, Broda said he is well aware of that particular form of crookery but it doesn’t – so far at least – seem to be common in the Sartell area. But as Broda and other law-enforcement personnel know all too well, such scams can and do happen anywhere and everywhere so people must educate themselves on how to avoid them, Broda advises.

He suggests people should get their tax forms done and submitted as soon as possible because IRS scammers try to beat tax filers to the punch.

The IRS scam is called the “Erroneous Tax Refund Scam,” and it’s one of the most devious, sophisticated rip-offs yet devised.

In 2017, according to the IRS, there were nearly 600,000 tax returns issued because of one form or another of  identity theft. That was a decrease of about 200,000 from the year before, but the IRS cautions people that cyber-criminals are constantly changing their devious methods with always a new con scam to pull on the unsuspecting victims.

According to the Internal Revenue Service, the highly sophisticated and devious scheme began last summer. That is when cyber-criminals, posing as potential tax clients, began using phishing emails sent to professional tax preparers. That was the first step in obtaining personal information about the tax professional’s legitimate clients.

They then use that information to file fake tax returns, using the direct-deposit information they have stolen. With no certain way to detect a scam going on, the IRS then auto-deposits the return in the legitimate client’s bank.

Scam variation 1: The client then receives a call that he or she has been identified as participating in a tax-fraud scheme and that the money they received must be returned immediately to avoid prosecution. If the client is fooled and follows the scammer’s directions, that returned refund money will be sent right into the hands of the crooks.

Scam variation 2: The crook, in a phone call, poses as a debt-collection person acting on behalf of the IRS. He says the refund was deposited by mistake by the IRS and that it must be sent to the debt-collection agency. Again, if the victim follows directions, the crooks collect the money.

Scam variation 3: A robocall claiming to represent the IRS threatens the person will be arrested on a warrant if the refund money is not returned immediately. Once again, if the money is sent, it goes to the crooks, not the IRS.

Broda emphasized that the IRS does not contact people via phone calls nor does it make threats about confiscating money or having people arrested and jailed.

“When people get those kinds of threats on the phone, some will panic and will ‘pay up’ with information given from a debit card or credit card over the phone,” said Broda. “Don’t panic. The best thing to do is to hang up the phone and call the IRS.”

Broda and other investigators say best way to avoid any scams, is to be very skeptical when anybody on the phone or in person asks for any personal information, such as banking account numbers. That information should never be divulged in such situations.

What to do

Unfortunately, it’s quite a hassle to deal with these erroneous refunds because cyber-crooks are lately so sophisticated, so complicated, that they can tie a person up in knots.

Here are the steps for what to do as recommended by the IRS and local law enforcement:

  • Do not spend any IRS refund money in your bank account unless you are positive it’s the amount you  actually filed for. Instead, inform your bank immediately, and the bank can return the erroneous refund, noting that it was the result of a criminal scam.
  • If you have been scammed, obtain a Form 14039 (Identity Theft Affidavit) or have your tax professional obtain one for when you do your tax forms. This will allow IRS officials to know you were the victim of a scam so that your bonafide tax filing will be accepted and a genuine refund sent to you.
  • In addition, as soon as you learn of the erroneous tax refund, call one of the following numbers to report it immediately: For individual filers, call the IRS at 800-829-1040. For business filers, call 800-829-4933.
  • In some cases, cyber-crooks might scam the IRS into having your refund delivered in your mailbox. They hope you cash the check and leave the money in the bank so they can then rip it off. Call the IRS at one of the above numbers and find out which IRS regional office to send the check with a letter that you have been scammed.
  • If you relalize you have cashed an erroneous check, send a personal check or money order to your regional IRS office, being sure to write on the memo line of the check “Payment of Erroneous Refund” and tax year for which the refund was issued.

For more detailed information about this particular form of IRS tax-identify scam, go to, then go to “Tax Topic Number 161 – Returning an Erroneous Refund.”

Author: Dennis Dalman

Dalman was born and raised in South St. Cloud, graduated from St. Cloud Tech High School, then graduated from St. Cloud State University with a degree in English (emphasis on American and British literature) and mass communications (emphasis on print journalism). He studied in London, England for a year (1980-81) where he concentrated on British literature, political science, the history of Great Britain and wrote a book-length study of the British writer V.S. Naipaul. Dalman has been a reporter and weekly columnist for more than 30 years and worked for 16 of those years for the Alexandria Echo Press.

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