Tax season presents opportunities for cybercriminals to exploit unsuspecting taxpayers through a range of scams. One particular scam involves identity theft and the misuse of tax refund advances. These advances allow filers to receive a portion of their expected refund quickly, but scammers have found ways to capitalize on this service, leaving victims on the hook for loans they never requested.
What Is a Tax Refund Advance?
A tax refund advance allows filers to receive a portion of their expected tax refund within weeks or even days. To get the advance, taxpayers must apply through a tax preparation service. Some services require proof of income, while others do not.
The Tax Refund Advance Scam
Cybercriminals have devised a scheme to capitalize on tax refund advances and victimize innocent filers in the process. They begin by stealing unsuspecting taxpayers’ personal information and identities. Armed with these stolen identities, the scammers impersonate the victims and submit fabricated tax returns to major preparation services such as Jackson Hewitt or H&R Block.
These services then approve a tax refund advance based on the fake return. By the time the advance hits the imposter’s account, they have disappeared without a trace.
Meanwhile, the victim is left blindsided when the tax preparation company comes collecting on the advance. On top of losing the stolen refund money, the victim must also repay the loan plus steep interest rates. All for fraudulent tax filings the victim never filed in the first place.
How You Can Help Protect Yourself
Protect Your Personal Information
Cybercriminals often gain access to victims’ personal information through hacking, accidental exposure, or by tricking people into sharing sensitive data. Scammers may impersonate the IRS and claim to need information for tax purposes, only to disappear with your details.
Never share personal details such as your Social Security number or bank account information with anyone you don’t completely trust. If scammers obtain this data, they can file taxes in your name and steal your refund.
File Your Taxes Early
As soon as you receive your tax forms, file your taxes. This helps protect you from potential fraud. If a scammer attempts to file using your information after you’ve already submitted your return, their attempt will be rejected. Filing early helps ensure the scammer’s efforts are fruitless, and they’ll likely move on.
Use IdentityIQ Identity Theft Protection Services
Help protect your identity with IdentityIQ identity theft protection services. Their advanced monitoring system keeps a vigilant eye on your personal information, alerting you in real-time to possible suspicious activity that could signal identity theft.
With flexible pricing plans, you can enjoy complete peace of mind knowing your identity is secure and expert support is just a call away if the unthinkable happens.
How to Report
If you fall victim to identity theft, you should report the incident to the police first, then contact your credit card companies and relay the same information. You should also file a report with the Federal Trade Commission by filling out the form at IdentityTheft.gov or by calling 877-438-4388.
Bottom Line
To help you avoid becoming a victim of a tax refund advance scam, remember:
- The IRS does not initiate communication with taxpayers via text messages, emails, or social media.
- The IRS never leaves a pre-recorded/robocall voicemail asking for payment.
- The IRS never asks for your personal login information for your bank or credit card accounts.
- The IRS won’t threaten you with arrest or deportation for non-payment.
- The IRS does not have the authority to revoke your Social Security number, driver’s license, or visa. If the person on the other end of the phone uses these threats, it’s a scare tactic and a scam.