Skip to main content
February 22, 2018 | fraud--identity-protection

5 Common Types of Tax Refund Fraud


It’s Tax Season again, which means it’s time to be on the lookout for fraudsters and scammers looking to take advantage of unsuspecting taxpayers. Keep an eye out for red flags and stay away from offers that are too good to be true.

Fake Tax Refund

can occur when a scammer obtains sensitive consumer information, perhaps from a tax preparer, like social security numbers, bank account information, or other data and uses this information to file a false tax return on the victim’s behalf. The refund is then deposited into the victims’ bank account. The scammer contacts the victim posing as an IRS agent, stating that the refund was a mistake and provides direction on how to return the money. Sometimes the scammer will even threaten the person to ensure compliance. When the victim follows the instructions, the money is forwarded to the thief.

Phony Tax Refund

is something you should be suspicious of if you file your taxes electronically and the return is rejected. A fraudster may have stolen your identity and filed a phony tax refund. If your return was rejected and you were the victim of identity theft (for example, your information was leaked in the 2017 Equifax breach) the IRS advises that you submit an Identity Theft Affidavit (Form 14039), and also that you continue to pay your taxes and file your tax return, even if you must do so by paper.

Identity Theft

occurs when a thief uses your personal identifying information to commit fraud or other crimes without your permission. For example, an identity thief could use a tax payer’s personal information to file a fraudulent tax return and claim a refund. Learn more about the steps the IRS takes to protect tax payers’ identities.

Phishing

is an attempt by a fraudster to collect your personal information by way of a fraudulent email or website that appears to be from a legitimate entity, such as the IRS. Remember, the IRS does not initiate contact with taxpayers by email to request personal or financial information – ever. Report IRS-related phishing attempts by forwarding the email to phishing@irs.gov.

Return Preparer Fraud

can occur if a dishonest tax preparer commits refund fraud or identity theft against an unsuspecting taxpayer. The IRS reminds consumers to only choose preparers who sign the returns they prepare and enter their IRS Preparer TIN.

For more information on this and other consumer protection issues, check out these helpful resources: