Billions in tax refunds are being redirected to scammers. Take these steps to protect yourself.
Drug dealers and other criminals are exchanging their guns for laptops, in what is considered the safest and most profitable scam taking place today: tax refund fraud.
Perpetrators steal or purchase the identities of potential victims, including social security number, date of birth and address. Using this information, they file a tax return on behalf of the victim with bogus information designed to trigger a large refund. The scammers then request that the refund be paid via direct deposit to a bank account they control. As soon as they receive the refund, they withdraw it, close the account and disappear. Or in another variation, they request that the refund be sent in a pre-paid debit card, which can be used quickly without being traced. It’s so simple that billions of dollars in refunds are rerouted each year to these scam artists. Victims are left clueless and fighting with the IRS for months or years with little hope of recuperating what was lost.
The IRS is now in the hot seat over its inability to prevent this scam. It doesn’t flag significant changes from one year’s return to another; it allows refunds to be deposited into any bank account regardless of who owns the account; and it doesn’t catch obvious signs, like 1,000-plus tax returns being filed with the same street address.
It’s up to to you to protect your refund by taking these steps:
Protect your personal information and make sure you’re aware of any breaches of your data.
Triple check to make sure your tax preparer is authentic and not a sophisticated front to steal your return.
Request an Identitiy Protection PIN from the IRS, which puts a hold on the processing of your tax return until someone has looked at it manually and compared it over three years to spot any suspicous changes.
Request an electronic filing PIN, which is required to file online.
Finally, file early. Beat the scammers to it!