Another reason to e-file: Theft of snail-mailed tax refund checks is increasing

October 5, 2024
Woman getting mail from community box area

Getting mail delivered to your home is convenient. But even individually locked boxes, like these in this community collection area, are not safe from mail thieves.

The Internal Revenue Service last week reaffirmed its commitment to modernization, specifically giving taxpayers more digital options, when it announced 24 states will be part of its Direct File program.

Direct File is the IRS’ own tax preparation software that eligible taxpayers can use to prepare and electronically file their annual federal tax returns for free.

The key for users is free. From the IRS' perspective, a more important part is electronic filing.

More digital tax options: The IRS has come a very long way since 25,000 e-filed returns were submitted by five tax preparers in 1986.

Last year, almost 93 percent of filings were e-filed, either by paid tax preparers or directly by taxpayers. This year, based on filing data through May 10, the e-filing rate is 95 percent, and could increase as extended returns are submitted.

The IRS and taxpayers both like e-filing for many of the same reasons.

Taxpayers find it easier and quicker than dealing with hand-filed paper returns. Similarly, IRS processes electronic filings more quickly, meaning refunds go out sooner. And it’s safer than sending tax material via the U.S. Postal Service.

That final e-filing plus has been underscored by a recent rash of stolen U.S. Treasury tax refund checks.

Mailed refunds are theft targets: “Taxpayer refund checks are getting stolen in the mail,” writes Wall Street Journal personal finance reporter Ashlea Ebeling. “And then, when the Treasury Department issues the taxpayer a new check through the mail, the replacement is getting stolen too.”

Ebeling’s article, Millions of Dollars in Tax Refund Checks Are Getting Stolen, is this weekend’s Saturday Shout Out.

As is the case with (and reason for) these weekend shouts to other tax articles, I’ll let you read the piece at your leisure. But I did want to highlight a couple of Ebeling’s points.

The Treasury’s Financial Crimes Enforcement Network is on the case. Last year, it issued an alert on a nationwide increase in mail theft-related check fraud. Last month, it issued an update noting that the problem continues.

But the good news is that some of the tax check thieves have been caught and punished.

In February, writes Ebeling, two New York men were sent to federal prison for stealing a $2.9 million IRS refund that was supposed to go to a Houston couple. In August, a South Los Angeles man was sentenced to more than seven years in federal prison for using Instagram to solicit bank-account holders to deposit stolen checks worth at least $2.7 million.

So, if you’re still a paper tax transaction holdout, both for filing and getting your refund, consider going electronic next filing season.

You also might find these items of interest:

 

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Comments
  • Thanks Kay for alerting us to the increased risk of theft of those paper refund checks. However, your story is COMPLETELY misguided in recommending e-filing of an income tax return as the way to reduce that risk. The risk of losing a paper refund check is avoided by requesting Direct Deposit of one’s tax refund to a bank account. That refund option is chosen by entering taxpayer bank information on Line 35 of page two of Form 1040 (when that form is used). ALL individual federal income tax returns, both paper-filed and e-filed returns, allow that information to be submitted. Furthermore, an e-filed income tax return without the Line 35 Direct Deposit information will generate (wait for it) *a paper refund check*! I hope you find this Comment helpful.

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