With tax season upon consumers once again, it’s also when they are most vulnerable to tax refund fraud. According to the Internal Revenue Service (IRS), 2016 saw a more than 50% drop on stolen identities in federal tax returns, and new and expanded safeguards will be added for 2017, but challenges still remain.
Since the methods for tax refund distribution generally go through financial institutions, credit unions can play a critical role battling tax refund fraud.
The Treasury’s Financial Crimes Enforcement Network and the IRS have issued a list of potential red flags, including:
If a credit union finds these red flags and conducts and investigation that determines a suspicious activity report should be filed, the term “tax refund fraud” should be used in the narrative section.
Addition details can be found on CUNA’s CompBlog.