Income tax refund fraud is increasing nationally and in Ohio at an alarming rate. Income tax refund fraud occurs when someone has stolen your identity (name and Social Security number) and files an income tax return (before you) using a falsified W-2. The alleged federal and state income tax reflected as withheld on the fictitious W-2 is so high that it will result in them receiving a fraudulent refund. Prior to issuing the income tax refund, tax agencies are unable to compare the W-2’s reflected on the income tax return to the actual W-2’s that were filed by employers. If this would occur, income tax refunds would be delayed for months, but occurrences of fraud would be considerably less!
No one can prevent someone else obtaining their name, Social Security number, address, and other personal information. Think of all the people to whom you have provided your personal information over the years. Think about what you may “volunteer” on social networking sites such as Facebook. The list is unfortunately endless. As a result, you must be on alert and ready to act should the fraud man come calling.
Either your CPA or the income tax agency (in writing) will advise you that you are the victim of income tax refund fraud as a result of someone either filing an income tax return in your name before you or as a result of your electronically filed return being rejected for the same reason.
How can you prevent it from happening? You can’t. It is helpful if you can file your income tax returns earlier rather than procrastinating, resulting in needing your CPA to obtain a six-month extension of time to file your return. The longer you put off filing, the easier you are making it for these criminals to file before you have had the chance.
There are a multitude of current IRS scams attempting to fool consumers into disclosing their Social Security number, credit card or bank account information. Remember, the IRS will never call, text or email you. Any one of these solicitations is a scam—do not respond to them!
If you receive any written income tax correspondence from an income tax agency, please forward it immediately to your tax preparer for review and follow up.
If you learn that you are an income tax refund fraud victim, Skoda Minotti can assist you in completing a required affidavit with the respective taxing agency, whether that agency be the IRS (Form 14039) or the state of Ohio.
In 2012, the IRS has begun issuing Personal Identification Numbers (PIN) to taxpayers whose Social Security numbers have been used in filing fraudulent income tax returns. You cannot voluntarily request a PIN; you either are issued one or are invited to get one. If you are invited to obtain one, we recommend that you do as the IRS would have some evidence that your Social Security number may be involved in some federal income tax refund schemes.
In 2014, the state of Ohio has implemented a four-question refund quiz whereby you are notified in writing of having to take the quiz to process your Ohio refund. The state of Ohio will provide you a link to access the short quiz which can ask you a handful of income, personal, real estate, vehicle, physical feature and family questions. You get two attempts to answer three of the questions correctly for the refund to be processed! There is no quiz requirement if you owe the state of Ohio a balance due with your return.
On a side note, learning that you are a victim of a tax refund scam, while personally disturbing, should be a wake-up call that someone out “there” has your information. Your identity theft problem can be much bigger than the inconvenience associated with the delayed income tax refund. You should secure your three credit reports on an annual basis and review them for unusual or unauthorized activity. You may even wish to consider freezing your credit to prevent any further abuse.
For more information on handling income tax fraud, contact Frank Suponcic at 440-449-6800 or firstname.lastname@example.org.