WASHINGTON (1/25/16)--Identity theft tax refund fraud is the No. 1 Internal Revenue Service (IRS) scam, but it’s a scam that credit unions can help thwart. Since the methods of tax refund distribution are usually run through a financial institution, credit unions are in a good position to identify a scam as it's happening.
As part of the scam, an identity thief uses a taxpayer’s identity to file a fraudulent tax return and claim a refund.
If the credit union determines that a suspicious activity report (SAR) should be filed, FinCEN requests that the term “tax refund fraud” be included in the narrative section.
Also, due to the time sensitive nature of these transactions, FinCEN recommends that credit unions alert local IRS Criminal Investigation Field Offices.
This week also marks the start of the Federal Trade Commission’s tax identify theft awareness week, with webinars and Twitter chats scheduled throughout the week.
The Credit Union National Association's CompBlog takes a deeper look at this issue in a recent post. CUNA's Compliance Community features the latest CompBlog posts, as well as other items on credit union compliance topics.