A large-scale check fraud operation has reportedly stolen millions in IRS refund checks from taxpayers across the country. Over 200 complaints have been filed with Rep. Nicole Malliotakis (R-NY) from constituents whose checks were either stolen or never arrived. These complaints represent $3.8 million in missing refund checks, and the issue is believed to be part of a broader nationwide fraud scheme.
The Wall Street Journal reported that taxpayers expecting refunds ranging from a few hundred dollars to half a million have been left waiting, often for months, only to find out their checks were fraudulently deposited. One such case involves Atlanta-based spine surgeon Bennett Grimm, who is still waiting for a $96,000 refund check from the IRS. After multiple reissued checks were stolen, Grimm is hoping his latest request will finally result in payment.
Rep. Malliotakis said the fraud is impacting many of her Staten Island constituents. “People are getting these checks reissued, and the reissued checks are stolen,” she told reporters.
The IRS has encouraged taxpayers to use direct deposit instead of requesting paper checks, as the latter are more susceptible to theft. IRS Commissioner Danny Werfel emphasized that direct deposit is the “fastest and safest” way to receive refunds. However, an estimated 10 million taxpayers still choose paper checks, leaving them vulnerable to the increasing fraud incidents.
Taxpayers who have their checks stolen must file a taxpayer statement form with the IRS, and the Treasury Department’s Bureau of Fiscal Service will issue a new check once the claim is verified. While this process can take up to four months, some taxpayers have reported waiting even longer.
Check fraud has seen a dramatic rise in recent years. In one notable case, two individuals from New York were sentenced to federal prison in February after stealing a $2.9 million IRS refund check intended for a Texas couple. More recently, a Los Angeles man was sentenced to seven years for his involvement in a scheme that used stolen checks totaling $2.7 million.
As the IRS continues to deal with the fallout from this growing fraud problem, taxpayers are being advised to take steps to protect their personal information and opt for direct deposit to minimize the risk of theft.
