A growing scandal involving stolen IRS refund checks has impacted hundreds of taxpayers, with millions of dollars lost to fraud. According to reports, more than 200 taxpayers, including many from Staten Island, have lodged complaints about missing refund checks, which appear to have been fraudulently stolen and cashed.
Rep. Nicole Malliotakis (R-NY) has received 218 complaints so far, totaling $3.8 million in stolen IRS refunds. The Wall Street Journal reported that taxpayers awaiting refunds ranging from a few hundred to hundreds of thousands of dollars have been affected.
One of the victims, Atlanta-based spine surgeon Bennett Grimm, expected a $96,000 refund from the IRS following the sale of his medical practice. After his original check went missing, the IRS reissued it—only for it to be stolen and deposited fraudulently. Grimm has yet to receive his third reissued check, but he remains hopeful that this one will finally make it through.
The IRS has been urging taxpayers to use direct deposit as the safest and fastest way to receive refunds. However, an estimated 10 million taxpayers still opt for paper checks, leaving them vulnerable to theft. IRS Commissioner Danny Werfel said the agency strongly recommends direct deposit to prevent such incidents.
In cases of lost or stolen checks, taxpayers must file a taxpayer statement form with the IRS. Once the Treasury Department’s Bureau of Fiscal Service verifies the claim, a new check is issued. While this process typically takes less than 30 days, some cases take up to four months.
The issue of check fraud is not new. The Financial Crimes Enforcement Network has previously warned of a rise in fraud related to stolen checks. In one high-profile case, two individuals from New York were sentenced to prison for stealing a $2.9 million IRS refund check intended for a couple in Texas. Another case in Los Angeles involved a man using Instagram to recruit people to deposit stolen checks totaling $2.7 million.
With taxpayers increasingly falling victim to these fraud schemes, many are calling for stronger protections and more secure methods of refund delivery.
