Scammers Stealing Tax Refunds: What to Know Before You File - NBC Connecticut

Scammers Stealing Tax Refunds: What to Know Before You File

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    NEWSLETTERS

    The Troubleshooters share information on ways scammers are getting a hold of people's tax refunds and personal information and give you tips on protecting yourself from becoming a victim. (Published Saturday, Feb. 7, 2015)

    It’s tax time, and that means it’s also scam season. The Troubleshooters are raising red flags about the top ways you could be fooled out of your money and sensitive personal information. We want to make sure you get your return before thieves get their hands on it.

    We caught up with a man who doesn’t want his name used so we will call him “Joe” after learning that he was convicted of tax fraud in 2011.

    Even though he was the one arrested, Joe still says he fell victim to a scam a few years ago at the hands of a tax preparer who charged him just $50, but ended up ruining his record. Joe said the man filed a state tax return for a company where he never worked.

    “Obviously he was doing something illegal, but it was my fault for not looking over it,” said Joe. “So I take the responsibility for that.”

    So where did the mystery tax preparer find this company?

    “I guess he just made them up,” Joe suggested.

    But the Troubleshooters learned that the company is real.

    According to the police report, when detectives asked Joe for the name of the tax preparer, he said he didn’t know. The return was filed electronically, so there is no proof there ever was a tax preparer.

    But there was evidence that Joe was mixed up in tax fraud. He pled guilty to larceny and filing a false return, and served time in jail.

    No. 4: Tax Preparer Fraud

    Although prosecutors believed otherwise, Joe considers himself to be a victim of tax preparer fraud, which ranks No. 4 on the IRS’ list of top tax scams.

    Anny Pachner with the IRS explained that tax preparers can also be tax cheats.

    "There are some preparers that set up shop especially during the tax filing season to commit identity theft and also financial theft," warned Pachner.

    Connecticut Department of Revenue Service Commissioner Kevin Sullivan urged residents to watch out for tax preparers who want control of their refunds, because the money could end up going to them.

    “Let’s have your refund sent here to this office, and we will cut a check for that amount of money, minus our fee,” Sullivan said, describing an example of how scammers operate. “Don't do that because the check will come, the people will be gone, you will get zero.”

    No. 3: Identity Theft

    Coming in at No. 3 on the IRS' list is identity theft. Sophisticated con-artists will go to great lengths to steal personal information.

    “Sorry to say it but you can just go on the web and buy people’s social security numbers,” said Sullivan.

    Once a person has your social security number, the rest of the information they need is easy to get a hold of. Thieves are clever enough to get your information a number of ways, but some do it the old-fashioned way and will actually rummage through your garbage.

    Once they know enough about you, they file online electronically through any number of sites with a bogus return and claim money in your name.

    We asked some people in Bethel if they wait until the last minute or file their taxes right away.

    “I file my taxes as soon as I have all my information, all my paperwork together,” said Naomi Silverman.

    Experts say filing fast is a good way to combat tax refund theft.

    “The sooner you get in there, the less time there is for someone to make up an identity and go after your refund,” said Sullivan.

    No. 2: Phishing

    Some residents aren’t aware that their tax refund is at risk and were shocked to learn that there are people who can steal your tax return by filing online before you do. This could make them easier targets for the No. 2 scam on the watch list – phishing.

    “You would receive an email or a link to a website that claims to be the IRS,” Pachner explained. “You should not click on that type of link; you should not open that email.”

    Because once you do, you will be asked for personal information that scammers can use to steal your refund if you answer.

    No. 1: Phone Scam

    Topping the list is the telephone scam.

    “Usually what happens is you receive a phone call from a scammer pretending to be an IRS employee. They tell you that you owe money to the IRS and you must pay immediately over the phone usually with a prepaid debit card or through a wire transfer,” said Pachner. "If you receive this type of call you should hang up immediately.”

    Pachner said the IRS would first contact you by mail and never demand money on the spot.

    CardHacking

    In addition to the four major tax scams, there's something else to watch out for.

    In 2013, about 7,000 Connecticut residents had their personal information stolen from the JP Morgan Chase debit cards through which they received their refunds.

    “The problem in this case was not our lapse, but the bank’s lapse that was handling the debit cards,” said Sullivan. “They were hacked.”

    JP Morgan chase would not confirm the number of people affected, but acknowledged the issue in the following statement:

    “We notified all affected cardholders and offered them two years of free credit monitoring back when this occurred in 2013. We have found no evidence that the information was used improperly. In addition, we have installed safeguards to prevent a recurrence and we continuously review our security.”

    Experts say the safest way to get your tax refund is by direct deposit, but remember – don’t wait too long to file, and choose your filing method and tax preparer wisely.

    IRS experts say it can take about three years to re-establish your identity and get your refund back if it gets stolen.

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