WASHINGTON—Tax refund season means tax fraud, reminds CUNA, which noted that CUs can play a role in battling tax refund fraud.
CUNA pointed out that the Treasury’s Financial Crimes Enforcement Network and the IRS have issued a list of potential red flags, including:
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Multiple direct deposit refund payments going into one member’s account.
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Individuals attempting to negotiate double-endorsed tax refund checks with questionable identification.
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One individual accompanying multiple parties to the credit union to negotiate tax refund checks.
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The same signature/endorsement used on multiple checks, with multiple names.
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An account opened on behalf of individuals who are not present, with the opener being named as having signatory authority and the subsequent activity limited to direct deposits of tax refunds.
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A single individual opening multiple prepaid card accounts in different names, using valid taxpayer identification numbers for each of the supplied names and having cards mailed to the same address.
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A personal account where the majority of the transactions are automated clearing house tax refunds.
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A business account processing third-party tax refunds in a manner inconsistent with their stated business model.
- For money services business accounts—a sudden increase in volume involving tax refund checks issued to individuals from across the country.
“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,” stated CUNA.