Scam targeting tax preparers tricks clients with fraudulent returns

When tax preparer Annette Kraft in Duncan, Oklahoma, checked the status of her clients’ tax returns in January, she was surprised to find all of them had been rejected.

“The code was 902-01,” she said. “That means someone else has already filed a tax return.”

It turns out her clients were victims of a new tax scam intended to cheat them out of their refunds. The criminals get their hands on returns from previous years, then use that information to file new fraudulent returns on unsuspecting victims. After the refund goes into the victim’s bank account, the crooks, posing as debt collectors for the IRS, follow up with a phone call claiming the refund was an error, then directing them to a fraudulent website to return the money.

  Annette Kraft

CBS News

“I had about $9,015 more than I anticipated,” said Duncan police officer David Woods.

He discovered that supposed refund one day as he checked his bank balance, but it didn’t make sense because he hadn’t filed his taxes yet.

“I didn’t get my W-2 to file my taxes,” Woods said.

He returned the money to the government, but now the IRS says his real refund of $3,000 will be delayed, possibly for months. He’s not alone.

At the local tire shop, 49-year-old Jerry Duvall told us his $5,800 return is more than two months late.

“We planned on taking care of expenses, getting caught up on bills and we counted on it,” Duvall said.

He missed a $200 car payment, and on the very day we spoke with him, he told us his car was getting repossessed.

At least 230 of Kraft’s clients have been hit and face months of delays. Taxpayers like 91-year-old Ray Prothro found out about the scam from the IRS while we were there.

“They ought to go to jail,” Prothro said.

It’s not just one tax preparer in Duncan. There may be as many as 100 tax preparers across the country affected by this scam. Those are just the ones that they know of, so the real number could be tens of thousands of taxpayers.

IRS agents showed us where criminals buy those tax returns on the dark web. One seller offered an example: A Midwestern couple’s full 2016 tax return.

As for Kraft, she says the scam has turned her business upside down.

“My clients are more like a family,” Kraft said. “I want them to know that they can trust me, that I can trust them, it hurts.”

Although the IRS says preparers are the ones being hacked, Kraft’s own experts told her she was not hacked. But the IRS says there are a variety of ways for hackers to break in and steal information.

If you see an unexpected refund pop into your account, call your bank and the IRS, and get the money sent back to the Treasury. If you keep money you’re not entitled to, the IRS will require you pay it back.

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