Fraud Education

Tax Scams

While tax scams usually peak during filing season, tax scams are a year-round form of theft. How big? In 2022 alone, the IRS flagged more than $5.7 billion in tax fraud. Fraudsters impersonate Internal Revenue Service employees in hopes of stealing money or identity-related data they can then use to file fraudulent tax returns.

Thieves prey on the stress of speaking to the IRS or the busier-than-usual tax season and try to exploit vulnerabilities through fraudulent phone calls, letters and emails. They might intimidate or bully someone into paying a fabricated tax bill or threaten to arrest or deport a scam victim if they don’t comply.

How can you spot tax scams?

Each year, the IRS releases the annual Dirty Dozen to alert taxpayers and tax professionals to trending scams and schemes. Here are some of the most popular forms of tax fraud the IRS saw in 2023:

• Employee Retention Credit claims which thieves use to steal sensitive information to fuel identity theft
• Unsolicited phishing and smishing attempts designed to lure victims to share personal data used for identity theft.
• Offers of online account help which give a scammer access to personal information or financial data
• Fake Fuel Tax Credit claims, which are not available to most taxpayers

There are scams that target high-income individuals, tax professionals or have international elements, and much more. See the 2023 Dirty Dozen by the IRS.

The IRS doesn't initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information.

What steps help stop tax scams?

There are many signs that you may have been the victim of a tax scammer, including the IRS saying your return has already been filed, you receive unfamiliar tax documents or IRS.gov accounts, or you receive a refund before you’ve even filed.

To know if you’re really seeing or speaking to a representative from the IRS, you need to know how the IRS contacts taxpayers and ways they don’t.

• Most often contact is made by mail via the United States Postal Service.
• Other times, you might be visited at your residence or business after receiving several written notices from the IRS.
• Generally, home or business visits are unannounced due to the urgency of the matter.
• Revenue officers carry two forms of official identification: IRS-issued credentials and a standard, government-wide HSPD-12 card carried by federal employees. Both contain serial numbers and photos of the employee, and you can ask to see both.

If you come across individuals who promote improper and abusive tax schemes or tax return preparers who deliberately prepare improper returns, the IRS encourages that they be reported. You can use Form 14242 or contact the IRS Whistleblower Office.

Sources: IRS