NORTH OLMSTED, OH (WOIO) - The IRS is calling for tax preparers to step up their security after several thousand victims nationwide have been duped by fake returns, deposited right into their bank account.
Scammers are using taxpayers' real bank accounts to make a deposit, after hacking their information.
But the IRS warns it's not a real refund, and if you cash the check or don't report the money, you will wind up paying.
In one case, thieves contact you pretending to be a collection agency for the IRS, saying the refund was an error. They ask you to forward the money to their collection agency.
In another case, a recorded caller claiming to be from the IRS threatens to arrest you and press criminal charges.
They give you a number to call to return the refund, and if you call it and give out your personal information, they make off with your hard-earned cash.
William Pappas is a partner at Pappas and Bitounis CPAs LLC in North Olmsted.
Some of his clients have had close calls with scams.
"I've had clients that have been called three or four times by these identity thieves. And they obviously keep getting scared but I keep reassuring them that it's a scam," Pappas said.
This is the number one thing he says taxpayers need to know:
"The IRS never makes phone calls to people. If you are going to be audited or checked, you always get a letter first," Pappas said.
He says if you get a refund check out of the blue, you'll need to report it.
"Never cash a check that you aren't expecting, because the IRS will hold you accountable and penalize you. If you return the check and don't cash it, you will not be penalized," Pappas said.
Most tax scams are online now and everyone's computer is a target.
Pappas recommends being careful how you store your sensitive information.
"People are storing their tax returns on their computers in PDF format, very dangerous to do unless that file is encrypted or password protected. Anyone coming on to your computer can get a copy of that return and steal your identity and your tax returns," he said.
Pappas recommends storing your tax returns on a flash drive that is password protected.
If you get a fake refund, you should contact the IRS and your tax preparer immediately.
You should also contact your bank, because you may need to close your account.
Here are steps to take to return an erroneous refund to the IRS, straight from the agency.
If the erroneous refund was a direct deposit:
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.
Call the IRS toll-free at 1-800-829-1040 (individual) or 1-800-829-4933 (business) to explain why the direct deposit is being returned.
If the erroneous refund was a paper check and hasn't been cashed:
Write "Void" in the endorsement section on the back of the check.
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.
Don't staple, bend, or paper clip the check.
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 assistor 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.