Be on guard against tax-refund cyber-crooks

Dennis DalmanFeatured News, News, St. Joseph0 Comments

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.

“We get calls about IRS scams every once in awhile,” said St. Joseph Police Chief Joel Klein.

The best thing to do is call the police as soon as residents get calls supposedly from the IRS, Klein said, adding that the IRS never makes such phone calls.

It’s 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 and always devising new scams 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 that 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.

“We want people to call us (the police),” Klein said. “That’s because we can become aware of the scam and notify others about it. In most cases, we cannot solve the scam, but we can warn others, and we can assure the people who received the calls they are not about to get arrested (as the scammers sometimes claim).”

Klein also advises potential scam victims that if they happen to get a number from the caller to write it down and report that number to the police.

Klein’s advice on how to handle scams holds true for all scamming attempts, not just the IRS variety.

The best way to avoid any scams, Klein added, 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, Klein advised.

What to do

Unfortunately, it’s quite a hassle to deal with these erroneous refunds because cyber-crooks are so sophisticated, so complicated, 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 yourself actually filed for. Instead, inform your bank immediately, and the bank can return the erroneous refund, noting 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 you when you do your tax forms. This will allow IRS officials to know you were the victim of a scam so 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 you have been scammed.
  • If you realize 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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