While tax season is a nice time to receive some extra cash from your tax refund, scammers will try to commit financial fraud and it is more common than you may think. To do so, criminals will impersonate an IRS agent or other government representative and attempt to trick you into providing them with your personal information or granting them access to your tax refund. Tax scams are worthwhile for scammers because they know only a few of us have experience dealing with the IRS. And once they have the information they need; the door opens to other types of fraud and even identity theft.
Beware of these 9 Tax Refund Scams:
How it works: Phishing is a criminal tactic that uses disguised email, text and voice message as a weapon to steal your personal information and money. Scammers will send you a type of message pretending to be the IRS, usually with a threatening or urgent message demanding payment.
How to avoid it: Look closely at the “From” field before taking any action outlined in the message. Scammers will make it look like it came from the IRS or another agency. If you hover over or click on the sender name, it will reveal their actual address. If .gov is not included in the email address, it’s a scam.
2. Phone calls
How it works: Scammers send more than thousands of calls at once using bots and robocalls pretending to be from the IRS. When you pick up the call, they’ll say you owe money for taxes, demand that you send the payment immediately, and even threaten to arrest you if you don't pay.
How to avoid it: Don’t trust caller ID – phone scams can appear to be from the official IRS phone number. The caller may give you a fake “badge number”, or even act like they know your social security number, which can be stolen.
3. A tax return was filed under your name
How it works: In 2022, there were 7.8 million tax-related suspicious activities reported. Tax identity theft occurs when someone submits a tax filing under your name, without your knowledge. Surprisingly enough, this doesn't require any tax documents — the only items a thief needs are your name, Social Security number, and date of birth.
How to avoid it: Set up an Identity Protection PIN or IP PIN. The IRS offers this as a voluntary step to help secure your return. You’ll set up a new six-digit passcode each year and use it to send in your returns. This serves as a password to verify your identity and prevent an impostor from filing in your name.
4. Claiming your Social Security number has been or will be suspended
How it works: Scammers will make bold threats in any way they can think of to try and get you to send them the information they want. In this scam, a fraudster will claim your Social Security Number has been or will be revoked or suspended due to a tax issue that you are not aware of.
How to avoid it: Hang up the phone call, delete the email, and ignore the scam! Remember, your Social Security number cannot be suspended or revoked.
5. Email requesting additional tax forms
How it works: If you receive an email from the IRS demanding you send a tax form, proceed with caution. There are several legitimate forms taxpayers may need to fill out, but most of these including W-9 and W-4 forms are mailed to companies.
How to avoid it: Ignore the message and report the suspected tax fraud activity to the IRS. The IRS will never contact you by email, so any request for forms like this is not legitimate. Read more about email compromise fraud and learn what to look out for.
6. You’re notified the IRS owes you an extra refund
How it works: In this scam, you receive an email (first red flag!) indicating the IRS has recalculated your return and you're owed an extra refund. It’s your lucky day! However, in order to receive the money, you need to click on the link in the email to confirm your personal and financial information. This is a classic example of phishing — there is no extra refund, and your information goes directly into the hands of identity thieves.
How to avoid it: Don’t believe any email that claims to come from the IRS is legitimate. If they do need to contact you, they’ll send a letter in the mail first. If you would like to check the status of your refund, use the IRS’ Where’s My Refund? tool.
7. Overdue stimulus payments or unemployment benefits
How it works: The pandemic has brought new types of scams related to COVID-19. Some of the more common scams pertain to PPP (Paycheck Protection Program) fraud where you’re told that you have an extra or overdue stimulus payment or unemployment check coming your way. This message will require you to click on a link and “verify” your personal information or require a fee to receive payments. In both of these cases, the information or money goes directly to a tax scammer instead.
How to avoid it: It’s important to remember that the IRS will never contact you by email. Instead, log into your IRS account to see the status of your refund.
8. Demanding payment in gift cards or cryptocurrency
How it works: A scammer may call and demand you make a payment for penalties or overpaid taxes. However, they want the payment sent in another form rather than money such as Visa, iTunes or Amazon gift cards, or cryptocurrency, like Bitcoin.
How to avoid it: Ignore the threats! The IRS does not accept gift cards or cryptocurrency as payment, so anyone who asks is definitely a scammer.
9. Overdue payment scam
How it works: This scam occurs when you receive a refund by direct deposit — either real or fraudulent. Then you receive a call or text from someone posing as an IRS agent who claims your refund was more than it should have been, and you’ll need to send the extra money back, usually by a wire transfer or gift card.
How to avoid it: Be cautious when it comes to sending money to agencies. While there are times you may need to pay back an accidental refund, the IRS will notify you by mail and will accept multiple payment methods.
How to Spot an Imposter
It’s important to keep in mind that the IRS’s first point of contact is a physical letter sent through the U.S. Postal Service. The only instance where the IRS may call you or visit in person is if you have several years of unpaid taxes and have not responded to any of their letters. If you receive a call, the IRS agent will introduce themselves by name and will never threaten you or demand payment immediately. If an agent pays a visit in person, they will show you their government ID badge known as an HSPD-12. In the case that they don’t, always ask to see it.
What to Do if You Fall Victim to a Tax Scammer
- If you discover a tax return has been filed in your name that you did not submit, fill out an Identity Theft Affidavit and either mail or fax it to the IRS.
- If you are contacted and told you owe taxes, the first thing to do is to verify how much you owe. This can be securely viewed online. If the amount is different than what you were told, then you know it’s a scammer trying to trick you. If you’re on the phone with the imposter, just hang up. If you’ve received any fraudulent documents, be sure to hold onto them so you can report the scam.
- If you’ve accidentally sent money to a fraudster, cancel the transaction immediately, if possible. If you provided your bank or credit card information, contact the fraud department of the impacted company to request a freeze or cancellation of your account right away.
- Report the fraud as quickly as possible. You can forward scam emails to phishing at irs dot gov and send any scam text messages that you receive to 202-552-1226.
The sooner you report the fraud, the sooner you can stop the scammer! For more tips to help protect your personal and financial information, check out our other blogs on Privacy & Cybersecurity. If you believe your information has been compromised or you think you are a victim of identity theft, we’re here to help! Contact us at 866-224-1379.