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Tax Refund Fraud Time

Mar 9, 2017 | General

There are three things in the world that deserve no mercy, hypocrisy, fraud, and tyranny. – Frederick William Robertson

Businesses, taxpayers and tax preparers are all susceptible to fraud and theft. Illegal activities like tax-refund fraud spike at this time of the year, because quarterly filings for businesses and annual tax returns are both due within the next five weeks. At Brinen & Associates, we’re lawyers and tax professionals, and we see this sort of activity all year long.

Tax-refund fraud is also known as tax-related identity theft, and occurs when someone uses another person’s Social Security number or other personal information to file a bogus tax return and receive its refund. It can be claimed whether or not the victim qualified for a refund. Thieves exploit this chaotic time of year because there’s so much information being transferred and they can cash the refund before the victim notices.

Here are some preventative measures tax preparers can use to educate their clients.

Make A Public Announcement

Whether your clients are business owners or private citizens, provide them with some light reading. Send a mass email to clients (bcc them, of course) or update your website reminding visitors of the predators out there and direct them to some important IRS website pages, including the page for Identity Protection: Prevention, Detection and Victim Assistance. This is the agency’s general identity theft page for victims, whether they’re preparers, individuals or businesses. It’s a great resource for anyone who needs tips on ways to safeguard their information.

Tell A Story

Every tax and accounting professional has a first- or second-hand anecdote of a client who’s been a victim of fraud.

Without naming names, tell your clients a brief story:

“Before she was a client, one woman received a call from someone with an indeterminate accent claiming to be an IRS agent and she gave her personal information. She lost what should have been a deposit into her kid’s 529.”

Embellish the story – scare them into being more cynical, changing their passwords and beefing up their cybersecurity.  Practice what you preach, too, dear tax preparer. Change your passwords and take extra security measures regularly to avoid hackers, because firms like ours are prime targets.

Remind Them Of The Protocol

We’re in client services, so always assure your clients that you are their watchdog. Let them know that you know the tricks and how to spot the signs.

Read from a script, if you’d like, directly from the IRS’ site:

The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.

If clients receive a convincing communiqué from someone claiming to be an IRS agent, have them send it your way and have your staff verify it. You’ll ascertain whether it’s legitimate and reaffirm your strong relationship.

The Wall Street Journal reported that the IRS has made significant progress in combating fraud. There has been a substantial decrease in new fraudulent federal tax claims to the IRS. In 2016 the agency reported a 50 percent decrease to 376,000 – that’s still more than 1,000 claims a day! It’s not a list you or your clients want to be on.

Contact Brinen & Associates for more ideas about ways to prevent and combat fraud and feel free to leave a comment.


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I formerly worked as a satellite employee from my home state of New Jersey. I ended my employment with my former employer in 2016. In 2018, I was sued by my former employer for $1.1 million in Illinois State Court. I was referred to Brinen & Associates, LLC by a friend who is a client of the firm. Brinen & Associates, LLC came highly recommended. I contacted Joshua Brinen and then had a consultation at his office with his colleague Mark White. Together, Messrs. Brinen and White explained my options...

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