Tax scammers snag refunds

IRS says fraudsters are creating fake 'free file' Web sites, diverting money
By Andrea Coombes, MarketWatch
Apr 13, 2007


SAN FRANCISCO (MarketWatch) -- Just days before the tax-filing deadline, the IRS issued a warning late Friday afternoon that scammers are creating Web sites that, posing as an IRS "free file" site, gather taxpayers' return information and then snag their refunds.

"We're seeing Web sites out there that are saying they're part of the Free File Alliance when in fact they aren't," said Terry Lemons, an IRS spokesman, in a telephone interview.

The Free File Alliance is a group of tax-preparation companies approved by the IRS to offer free online tax-prep software and filing services to eligible taxpayers. This year, taxpayers with an adjusted gross income of $52,000 or less in 2006 -- that's about 95 million U.S. taxpayers, or 70% of individual filers -- are eligible to e-file their returns for free, according to the IRS.

The scam sites pose as a free-file site, Lemons said. "These are sites designed to trick taxpayers into putting personal information in, and then the sites take the information, file a tax return and change the bank routing number. Then, instead of the money going to the taxpayer's account, it goes into the [scammers'] bank account," he said.

"We learned about this a short while ago. We're working quickly to make sure people are aware of this scam given how late it is in the tax season," Lemons said.
The only way to reach a legitimate "free file" Web site is by first going to www.irs.gov and clicking on "free file." The IRS site will then offer you a selection of tax-prep providers from which to choose. When you click on a provider's name, you will be taken from the IRS Web site to the approved provider's free file site.

How to know?
If you haven't yet filed and are eligible to file for free, be sure to go through the IRS.gov Web site, Lemons said. "It's not IRS.com. It's not IRS-dot-anything except IRS.gov."

If you already e-filed your taxes, but did not attempt to use free file, this scam is unlikely to affect you. And, if you e-filed via the free-file program and went through the IRS.gov site, you're also fine, Lemons said.

However, if you used a free-file program that you found without going through the IRS Web site, you may want to check up on the status of your refund. Taxpayers can do that via the "check my refund" feature at IRS.gov. For e-filers using direct deposit, the refund should arrive in their account within two weeks. If it doesn't, you may want to call the IRS.

"There are legitimate online tax-preparation firms out there," Lemons said. "The combination here is: It's a red flag if [taxpayers] think they've gone through something advertising itself as a free-file site if they have not gone through IRS.gov."

Also, "we're working to identify the affected taxpayers and we will do everything we can to help them out, including making sure they get their refund," Lemons said. "We believe we're going to be able to identify taxpayers affected by this on our end."

Source: Marketwatch