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Tuesday December 12, 2017

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Top Five IRS Refund Myths

In IR-2017-16, the IRS explained the top five "myths" about IRS refunds. Most early filers will receive a timely refund, but some taxpayers do not understand the process.

In this letter, the Service clarified some potential areas that hopefully will reduce taxpayer misunderstandings.

Myth 1: All Refunds Delayed – An estimated 90% of refunds will be processed by the IRS within 21 days. However, refunds involving the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) are required by Congress to be delayed until the middle of February.

Myth 2: Call IRS for Quicker Refund – Contacting the IRS will not change your refund date. It is best to use the "Where's My Refund" tool on www.irs.gov. The IRS database is generally updated each day. Calling the IRS is not going to provide new information – the IRS operators are looking at the same database as the taxpayers.

Myth 3: Order a Transcript – Taxpayers are permitted to order a transcript of their prior tax filings. This is frequently done for a mortgage application, student loan or other type of loan. However, the tax transcript will not show the refund date.

Myth 4: "Where's My Refund" Must Have Deposit Date – If filing and claiming the EITC or ACTC, there may be no deposit date on "Where's My Refund." Congress required the IRS to wait until mid-February with these refunds. By the fourth week of February there is likely to be a deposit date reflected on "Where's My Refund."

Myth 5: EITC and ACTC Refunds on February 15 – While Congress is required to hold all refunds for taxpayers claiming EITC or ACTC, it still will require some time to process those payments. The likely distribution date will be the fourth week of February.

The "Where's My Refund" on www.irs.gov or IRS2Go app has three steps. First, the return has been received. Second, a refund has been approved. Third, the refund has been sent. The best plan is to check "Where's My Refund" one time per day. The IRS computers are normally updated each evening.

Dangerous W-2 Phishing Scam


In IR-2017-20, the IRS warned of a "Dangerous W-2 Phishing Scam" that is "Targeting Schools, Restaurants, Hospitals, Tribal Groups and Others."

The attack often commences when a hacker breaks into the email account of an organization executive. The hacker may monitor the account to learn the typical contacts and activities of the executive.

Following this preparation, the attacker "spoofs" by sending an email to the finance or HR department. The "spoofed executive" directs finance or HR to send a list of W-2s to the executive.

After receiving all of the employee W-2 data, the hacker may also use a new strategy.

Hackers are also sending an email from the "spoofed executive" to the chief financial officer (CFO) of the organization. The bogus email directs the CFO to make a wire transfer of funds to a specific account. After the transfer is completed, the hacker withdraws the funds and vanishes into cyberspace.

All schools, restaurants, hospitals, tribal groups and other organizations should have set policies on distribution of W-2 forms. Organization leaders should explain to HR and finance staff the nature of this attack.

If you are attacked, contact the government by forwarding the bogus email to phishing@irs.gov and use "W2 Scam" as your subject line. If you have actually been victimized by this scam, then file a complaint with the Internet Crime Complaint Center (IC3). This complaint will be reviewed by the Federal Bureau of Investigation.

Commissioner John Koskinen warned about the new scam. He stated, "This is one of the most dangerous email phishing scams we've seen in a long time. It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns."

Published February 3, 2017

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