Do You Know How To Identify a Tax Scam?
When an IRS agent called Wendy Weaver claiming that she was under criminal investigation, Wendy was rightfully suspicious. But after the agent supplied the Washington woman’s Social Security number (SSN), she started to panic.
Over the next few hours, the agent instructed Wendy to purchase gift cards from multiple locations and share the card numbers and PINs with him. It was only after sending more than $9,000 that Wendy realized she was talking to a fraudster [*].
IRS scams like this one are nothing new — but they’ve gotten worse in recent years because data breaches give criminals easy access to sensitive information like SSNs and bank account numbers. According to the latest data [*]:
In 2022 alone, the IRS identified nearly 7.8 million reports of suspicious activity, resulting in over $5.7 billion in tax fraud.
If you want to protect yourself this tax season (and throughout the year), you need to remain calm and vigilant when engaging with anyone claiming to be from the IRS.
In this guide, we’ll explain how IRS scams work, the latest ways that fraudsters can target you during tax season, and what to do if you’ve fallen victim to a tax scam.
What are IRS Scams? How Do Fraudsters Target You During Tax Season?
IRS scams occur when scammers pose as agents from the Internal Revenue Service (IRS) and trick or pressure victims into giving up money or personal information. These scams can originate as phishing emails, fake text messages, phone calls, or even in-person visits from fake agents.
Scammers know that most people aren’t tax professionals and may respond without thinking if told that they’re in trouble with the IRS. This is why many of these tax scams include threats of fines or even jail time.
Even worse, according to the Treasury Inspector General for Tax Administration (TIGTA), scammers increasingly use stolen personal information — especially compromised SSNs — to make you believe they’re legitimate IRS agents [*].
Here’s what scammers can do if you fall for a tax scam:
- Steal sensitive personal information and use it for identity theft. Scammers posing as IRS agents are out to steal sensitive information like your name, SSN, taxpayer identification number (TIN), or credit card number. Anything you give them can be used to steal your identity or empty your bank account.
- Trick you into sending money, wire transfers, gift cards, or cryptocurrencies. IRS imposters often try to scare victims into making fake tax bill payments via non-secure payment methods.
- File taxes under your name and pocket your tax refund. Con artists collect information in order to file fraudulent tax returns and steal your tax refund.
- Pose as a tax professional and offer to get you large rebates or tax returns. Fraudulent tax preparers use your personal information to file falsified tax returns in your name — and then pocket the return.
The 10 Latest IRS Scams of 2023
- Phishing emails claiming your tax refund has been “recalculated”
- IRS impersonators asking for gift cards
- Calls claiming to be from the FDIC
- Scammers threatening to cancel your SSN
- Letters or calls from the “Bureau of Tax Enforcement”
- Fraudulent tax transcript emails
- Unexpected calls from the Taxpayer Advocate Service
- “Ghost” tax preparers
- Modified W-8BEN forms
- Fake IRS agents offering to help you
Every year, the IRS releases its “Dirty Dozen” — highlighting the worst tax scams of the past year. However, this list focuses mostly on people avoiding tax payments or committing other forms of tax fraud.
To help you stay safe, we’ve put together a list of the latest ways that scammers may target you with IRS scams during the 2023 tax season:
1. Phishing emails or texts claiming your tax refund has been “recalculated”
Scammers send fake text messages or phishing emails with eye-catching subject lines about tax refunds or recalculated rebates. Since the messages look like they’re from the IRS, recipients often take them seriously.
These messages almost always offer a larger tax refund payment than you were expecting. In order to claim it, you’re asked to click on a link and enter sensitive information — such as your driver’s license number, SSN, or even your bank account information.
But the website is fake, and any information that you enter goes straight to the scammer.
- Be suspicious of any unsolicited email or text claiming to be from the IRS. The IRS does not contact people directly about tax refunds — especially via email or text.
- The email shows signs of a phishing scam — such as an email sent from an address that doesn’t end in “@irs.gov.”
- The message prompts you to follow a link or download an attachment. These links can take you to fake websites or even infect your device with malware.
2. IRS impersonators asking for gift cards over the phone
In this version of an IRS phone scam, fraudsters posing as IRS agents reach out and threaten victims with massive fees or jail time if they don’t comply. For example, they may say that your name has been linked to fraud or criminal activity — and the only way to clear it is to purchase gift cards to repay alleged debts.
Scammers can even use caller ID spoofing technology to make it look like they’re calling from the IRS. Your best bet is to always hang up and call the agency back using one of its official phone numbers.
- Anyone who requests gift cards for payment is a scammer. The IRS and other government agencies do not ask for payments via gift cards, prepaid debit cards, or wire transfers.
- Threats and harassment are also huge red flags. If you have concerns about your status or personal records, contact authorities through official channels instead of communicating with a potential scammer.
3. Calls claiming to be from the FDIC asking for your bank information
Scammers pose as agents from the Federal Deposit Insurance Corporation (FDIC) to trick unsuspecting individuals into giving away financial information. Since the FDIC is a federal agency, these imposter scam calls sound legitimate.
They’ll tell you that you just need to “confirm” or “update” your financial information over the phone or via email. Other reports of these scams involve lies about unpaid debts and threats of lawsuits or jail time.
- Any unsolicited request from the FDIC for personal information or payment information is a scam.
- If you get an imposter scam call from the FDIC, hang up immediately and report the incident to law enforcement.
🎯 Related: What Can Scammers Do With Your Bank Account Number? →
4. Scammers threatening to “cancel” your Social Security number
Many scams start with a fraudster notifying you about a fake problem, and then offering to help you resolve it. Scams about Social Security numbers getting “canceled” or “suspended” skyrocketed a few years ago, and have been trending ever since [*].
Social Security scams are popular during tax season because your Social Security number is closely tied to your ability to file state and federal taxes. Scammers will threaten your SSN in order to get you to click on malicious links, download infected attachments, or send them money.
- Any mention of suspension or cancellation of your SSN is an immediate red flag.
- Don’t engage with any phone call, unsolicited email, or text message that’s supposed to be from the Social Security Administration. The SSA will contact you by sending mail to your residence.
Remember: In almost all cases, your Social Security number is yours for life. SSNs can’t be canceled, suspended, or revoked for any reason, and can only be changed in exceptional circumstances.
5. Letters or calls from the “Bureau of Tax Enforcement”
It’s easy to come up with a title that sounds like the official name of a government department. And that’s exactly how scammers get away with this particular tax scam.
Many targets have received emails and phone calls from the “Bureau of Tax Enforcement,” which is a fake collection agency invented by scammers. They inform their victims of a supposed tax lien that can only be settled by making an immediate payment.
- Contact and harassment from a collection agency is likely a scam, especially if the messages come with threats. If an agency requests immediate payment, it is almost certainly a scam.
- Always triple-check the validity of any message that you receive. Research the agency online by searching “[Agency name] + legitimate/reviews/scam.” You can also contact the IRS directly to make sure you’re dealing with a legitimate organization.
6. Fraudulent tax transcript emails from “IRS online”
In this scam, fraudsters change their email sender name to “IRS online” and send emails using the subject line “tax transcript.” (A tax transcript is a document that provides a summary of your tax information, including tax returns.)
These email scams are designed to convince the recipient to open the fake attached transcript document. In reality, it’s a dangerous file that infects the target’s device with invasive malware as soon as it’s opened.
- Look out for baiting phrases like “tax transcript” in email subject lines. Never download an attachment from an unsolicited email.
- Remember that the IRS will never send unsolicited emails to taxpayers, and they definitely won’t send sensitive documents via email.
- If you receive a message like this, delete it or forward it to email@example.com.
7. Unexpected calls from the Taxpayer Advocate Service
The Taxpayer Advocate Service is a legitimate organization under the umbrella of the IRS. However, scammers use this title to carry out imposter scams against the public.
In this variation of an IRS scam, the caller claims you owe tax debts that you must pay immediately. Callers might even say that you’re eligible for a special tax credit, but they need your personal information to help you file for it.
- The Taxpayer Advocate Service is an organization that you can contact for assistance. They will not contact you unless you contact them first.
- If you owe federal or state tax, you’ll receive a tax bill in the mail from the IRS.
8. “Ghost” tax preparers who won’t sign your tax return
Scammers disguised as tax professionals commit fraud using another person’s tax information. Their goal is to misreport your income and pocket the resulting tax refund.
Dishonest tax preparers will refuse to sign your tax return with their Preparer Tax Identification Number (PTIN), which means that they won’t be held liable for fraud — you will.
“Ghost” preparers are also known for putting down their own bank account information on your tax returns so that they’ll get your refund.
- Avoid tax promoters who promise amazing tax refunds if you use their services. This is a sign that they’re willing to fraudulently inflate income on your tax forms so that you’ll qualify for more deductions and tax credits.
- Before hiring tax professionals, take pains to verify their status and credentials by looking them up in the IRS’ Directory of Federal Tax Return Preparers.
🎯 Related: 8 Reasons Why You Should File Taxes Early in 2023 →
9. Modified W-8BEN forms that request sensitive information
The W-8BEN is an income tax exemption document for international taxpayers or nonresidents of the United States. Scammers send this form to individuals who might qualify for this exemption, but they modify it so that it requires sensitive information.
Since the W-8BEN form does exist, it’s easy for scammers to fool people into thinking it’s the real thing. But the true version doesn’t request information such as your passport number, mother’s maiden name, or PIN codes.
- Don’t engage in any communication about your W-8BEN form unless you can verify that it comes directly from your bank.
- Valid W-8BEN forms are not distributed by the IRS, but by employers. You’re meant to submit your completed W-8BEN documents back to the same employer, instead of to the IRS with a tax return.
10. Fake IRS agents offering to help you file a “casualty loss claim”
If you live in an area that was recently affected by a natural disaster, you might be a target of this IRS impersonation scam. Con artists contact victims via email or social media, posing as members of a charitable organization that’s partnering with the IRS to help victims file a casualty loss deduction on their tax returns.
Instead of trying to help, they’re actually trying to steal your sensitive information. If you need help filing a casualty loss claim, call the IRS’ official disaster assistance line at 866-562-5227.
- Don’t engage with unsolicited messages over email, text, or social media that offer help with filing your taxes.
- Beware of any supposed tax preparer or IRS employee that promises to get you tax exemptions and tax returns.
7 Warning Signs of an IRS Scam
- They contact you. The IRS will not reach out to you unless you contact them first. You can safely ignore any unsolicited message claiming to be from the IRS.
- You receive a pre-recorded voicemail. Using robocalls is a classic way for scammers to initiate contact.
- You receive threats of any kind. IRS agents will never threaten you with fines or criminal prosecution if you don’t comply with their instructions.
- You’re asked to pay using gift cards, wire transfers, or cryptocurrency. Tax payments should be made using other more secure methods, including bank transfers and checks.
- You’re asked to provide sensitive personal or financial information. The IRS should already know your name, SSN, phone number, etc. If someone can’t provide basic information about you, it’s a scam.
- They give you a form that’s not on the IRS website. Double-check any form against the original on the IRS website. If there are any modifications, or if you can’t find the form online, it’s a scam.
- They don’t know what an HSPD-12 card is, or they can’t provide their government-issued badge number. If an IRS agent visits you in person, they’re required to show an official Federal identity card. Make sure you take down any badge or employee numbers for your own records.
Were You Targeted by an IRS Scam? Here’s What To Do
If a tax scammer got to you, time is of the essence.
First, call your financial institutions to notify them of the fraud, and place a credit freeze with all three major credit bureaus — Experian, Equifax, and TransUnion. This prevents scammers from opening accounts or taking out loans in your name.
Next, change your passwords and secure your online accounts with two-factor authentication (2FA). Many scammers use your personal information to gain access to other sensitive accounts, such as your email, bank, or social media.
After that, you’ll want to report your experience to the Federal Trade Commission (FTC) online at ReportFraud.ftc.gov and IdentityTheft.gov. Contacting local law enforcement agencies to report details of the incident is also highly recommended.
Finally, you’ll want to monitor your sensitive information for signs of fraud.
Aura’s award-winning identity theft protection solution monitors your financial accounts (i.e., credit, bank, investment) and sensitive information (SSN, name, address, etc.) and alerts you in near real-time to any suspicious activity.
Aura also protects your data and devices with powerful digital security tools like antivirus software, a virtual private network (VPN), and secure password manager. And if the worst should happen, you’re covered for up to $1 million in eligible losses due to identity theft.
Zoom out: For a complete list of recovery protocols, use this fraud recovery checklist and follow all the steps for maximum protection.
How To Stay Safe When Filing Your Taxes This Year
Tax season is stressful enough without the looming possibility of being targeted by a cybercriminal. That said, a few safety tips can provide much-needed peace of mind as you prepare your taxes this year.
Here are some best anti-scam practices when it comes to IRS impersonators:
- File your taxes early. The earlier you file, the harder it is for scammers to file fraudulently using your information.
- Verify the legitimacy of anyone who contacts you about your taxes. Contact the IRS independently to confirm the agent’s information before you proceed.
- Keep your SSN secure by not sharing it with anyone via phone, email, or text. Here’s what to do if you think someone has (or is using) your SSN.
- Never respond to unsolicited calls, texts, emails, or social media messages. If anyone claims to be from the IRS, hang up and call the agency back through its official channels listed on IRS.gov.
- Learn the warning signs of online scammers. Fraudsters use the same tactics and social engineering attacks to target their victims.
- Regularly monitor your credit score, bank account, and personal finances. Aura keeps tabs on your most sensitive accounts for you so that you don’t have to worry about missing the warning signs of fraud.
- Thoroughly vet any tax professional before working with them. Make sure the person or company has the proper credentials — and that they sign your tax return when submitting it.
- Protect yourself from online threats by using antivirus software, VPN, and Safe Browsing Tools. Aura’s full suite of easy-to-use digital security tools can keep your private information safe from hackers and scammers.
- Scan the Dark Web for your personal information. If your email, SSN, phone number or other information has been leaked in a recent data breach, you could be at higher risk of identity theft and other scams.
- Consider signing up for an identity theft protection solution. Aura can help keep you and your family safe this tax season. Learn more about how Aura works and how you can begin using all of Aura’s top-rated features today to see it’s right for you.
The Bottom Line: Don’t Pay the “IRS Scam Tax”
Tax season offers a golden opportunity for scammers to strike. But it’s also an opportunity for you to boost your security and become less vulnerable to cybercriminals.
Remember that the dangers of tax scams go deeper than financial losses and IRS audits. When your personal information gets stolen, your risk of identity theft skyrockets. Aura’s extensive all-in-one protection and insurance coverage can help shield you and your whole family from online threats.