New tax fraud targeting professionals – What you need to know

Every year, tax season creates opportunities for criminals looking to steal your money. The IRS just issued an Alert regarding a new tax fraud.

Criminals are targeting CPA firms and tax professionals to obtain client information. The criminals use this information to prepare fraudulent tax returns (with your correct social security number, address, dependents, bank account information, etc.) seeking refunds. The refunds are deposited to your bank account, and then the criminals contact you – acting on behalf of the IRS, indicating that the refund was erroneously paid and use various tactics to reclaim the funds.

Protecting your information

Are your accountants, lawyers, and other consultants protecting your information? For starters, they should:

  • Use strong and unique passwords for client files;
  • Understand and seek current information on phishing scams;
  • Never open links or attachments without confirming what it is – a good practice is to obtain a verbal confirmation before opening it;
  • Password protect and encrypt all communications containing sensitive information – such as personally identifiable information (“PII”);
  • Client files and PII should be stored in locked cabinets when not used;
  • Examine all copy and fax machines to remove sensitive information;
  • All external hard drives, CD-ROMs, flash drives, and other media containing client information should be password protected.

What to do if you are a victim of tax fraud

According to the IRS, taxpayers who receive a direct deposit refund that they did not request should take the following steps:

  1. 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.
  2. Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.
  3. Keep in mind interest may accrue on the erroneous refund.

Contact us with any questions. At Baum Blaugrund, we are always available to help!