A common type of tax scam is the fraudulent text or email that appears to be from the IRS but is actually a phishing campaign. The FTC’s most recent alert reminds consumers that any message that asks you to verify your identity in order to receive your refund is a scam. You may get a text or email “from” the IRS or your state tax authority notifying you that they’ve processed your refund, and all you have to do is provide some information via the link provided in order to claim it.
As with any phishing scam, doing so hands your information directly to bad actors. Neither the IRS nor your state tax office will contact you via text, email, or social media message, and you should never click links in unsolicited communication.
IRS impersonation scams
Next, there’s the general category of IRS impersonation scams. Both of the above could be included here, but there’s also the fake IRS letter that—with great urgency—demands sensitive personal information or payment for taxes owed. Sometimes, these letters request said payment via gift card, which is always a red flag. Letters may also say something about an unclaimed refund and request photos of your identification.
Scammers have also been known to call people about their tax bill or refund while claiming to represent the IRS or another agency that provides government benefits. They may also claim that your information is being used in some type of crime. If a caller threatens you or demands payment, hang up immediately.
Tax prep scams
If you’re hiring a tax professional to help you with your return, you should vet them before handing over your information. At best, a tax preparer may lack the proper credentials and experience—at worst, they may falsify your return or pocket your refund. A “ghost” tax professional will scam you by not signing your return after they’ve prepared it.
You are legally responsible for your taxes, so do your due diligence and review your return carefully before signing your own name. Don’t pay for services in cash, and always get a receipt.
Tax identity theft scams
This scam typically involves a scammer filing a tax return using your name and SSN and pocketing the refund—and you may not realize that you’re a victim until after you’ve filed your real return and received a notice from the IRS about the duplicate. To prevent this, set up an identity protection PIN with the IRS. This six-digit number changes every calendar year, and no one can file a return under your SSN or individual taxpayer identification number (ITIN) without it. Note that the IRS will never ask for your IP PIN, so any communication requesting it is (also) a scam.
IRS support scams
Finally, scammers may contact you and offer paid services for something you can do for free. For example, you can easily create an IRS account online and do not need to pay someone to do it for you or hand over your personal information to a third party in the process. Anyone who offers unsolicited help to set up your account, negotiate your tax debt, or otherwise manage your return or refund (especially for a fee) is a scammer.
How to protect yourself from tax scams
As we’ve mentioned, stay vigilant to common scam tactics, such as unsolicited communication, a sense of urgency, and a demand for money or information. The IRS has specific ways of contacting taxpayers, and you should know how to verify that mailed notices and other forms of communication are real. You can always call the IRS directly to confirm if what you’re being told is legitimate. Don’t click links in texts, emails, or social media messages—instead, go directly to the IRS.gov website and access your account there.
When it comes to your return, if you’re not taking the DIY route, choose a qualified tax professional, and request an IP PIN to protect your SSN against fraudulent filing. Consider filing early and electronically, which will also get your refund processed sooner.
