How to Avoid Tax Scams

Tax-related scams occur all year round, but especially during tax season. According to the US Treasury, there were more than 2.5 million instances of people impersonating IRS employees during the previous decade.¹ More than 16,000 people have lost over $85 million in these tax scams.

As you prepare your tax filings this year, here are some of the most common tax scams to watch out for this tax season.

Watch out for these 8 tax scams

1. Phishing
   Phishing is when you receive an email or text with a website link directing you to a page designed to steal your information. To avoid phishing scams, do not click on any links sent by people you do not know, or in emails or texts that appear suspicious in any way.

   Be very cautious when providing personal information to any website. If you are sent a tax-related email that you believe is fraudulent, forward it to phishing@irs.gov. Remember, if you do receive an email from the IRS, you should go to a new browser and log onto your IRS account directly. DON’T click links in the message itself.

   If you log on and see a message, then you know it’s legitimate. If you don’t, the message is likely fraudulent.

2. Vishing
   This is similar to phishing but done over the phone. An individual will call you and claim that they are from the IRS. As part of a vishing scam, they will ask for personal information such as your Social Security number, address, full name or date of birth. If you receive a call like this, do not offer your information. Neither the IRS nor any reputable financial institution will ever ask for your Social Security number or other personal information over the phone.
3. Disaster scams
   Some fraudsters prey on those with big hearts. They will claim that they are representing an organization designed to help those impacted by a natural disaster or war and ask for donations. They will claim that these donations are tax-deductible. However, they will pocket these donations (and sometimes use your information to take more money from your account).
4. Refund bait and switch
   The IRS calls this a “new twist on an old scam.” After criminals have secured your sensitive personal information, such as your Social Security number or tax forms stolen in the mail, they may file a fraudulent return on your behalf. Once the funds hit your bank account, the scammers will impersonate someone from the IRS and call you demanding the return of the money. They will ask you to deposit it into a different account or send a check to an address.

   If you receive an unexpected tax bill or refund, file a complaint with the FTC, contact the IRS at 800.908.4490 and request that the major credit bureaus put a “fraud alert” on your record.

5. Threatened cancelation or suspension of your SSN
   A tax scammer will call and threaten that your Social Security number (SSN) will be canceled or suspended until your overdue taxes are paid. The scam may seem legit because the caller knows some personal information about you, like the last four digits of your SSN.

   If you receive a call like this, do not share your personal information and hang up immediately. If they call back, do not answer. Write down the number and send an email with the subject of “IRS Phone Scam” to phishing@irs.gov. Include the phone number and all other relevant information in the body of the email.

   If you do owe taxes, you can call the IRS at 800.829.1040 to discuss your payment options. However, your Social Security number will not be canceled or suspended.

6. Fake texts, emails, or social media messages
   Some scammers will contact you via social media, text messages, or emails claiming that you owe the IRS money or need to update your information on file. The IRS will never contact you via social media, text, or email asking for personal information. You should not answer these requests. If you receive any of these messages, you should report them to the IRS by contacting phishing@irs.gov.
7. Tax preparer ghosting
   Unfortunately, there are scam artists posing as tax professionals. They will offer to do your taxes, collect a portion or all of the payment upfront, and then ghost you. To protect yourself, be sure to only hire folks with an Enrolled Agent (EA) or Certified Public Accountant (CPA) license who have referrals that you can verify — check online here.
8. Dishonest tax preparers
   Other fraudsters will inflate your tax return to pocket some of the refund. To protect yourself, always double-check their work and the income that they receive from your tax filing.

Get an IRS IP PIN

If you want to protect yourself further from tax fraud, you can receive an Identity Protection PIN (IP PIN) directly from the IRS. An IP PIN is a special six-digit number that will ensure only you – or anyone who knows the IP PIN – can file your tax return.

Using an IP PIN means that no one will be able to file a tax return impersonating you. There will be a new IP PIN issued every year.

To get your IP PIN, you will have to prove your identity to the IRS with an online verification process. However, if you are not tech-savvy, there are also ways to complete this process over the phone or in person.

Learn more on the IRS website.

Report tax scams or fraud

If you think you are being scammed or someone is trying to defraud you, you can report these instances to the IRS and the California Franchise Tax Board (FTB).

If you want to report it to the FTB, the phone number is 800.852.5711. You can call between 8am and 5pm PT on weekdays. You can also file a report online at any time.

You can report tax scams to the IRS directly on their website. Choose from the list of potential scams and pick the one that fits what happened to you best. If you have lost money because of these scams, you should also contact the Federal Trade Commission and Treasury Inspector General for Tax Administration (TIGTA).

Tips & Facts

Neither the IRS nor any reputable financial institution will ever ask for your Social Security number or other personal information over the phone.

If you are a victim of tax fraud

If you are a tax fraud or scam victim, you can follow the steps listed above to report the scam or fraud to the IRS, FTC, TIGTA, and the California FTB.

Another thing you can do is set up a credit freeze through the three credit bureaus: Experian, TransUnion, and Equifax. If your Social Security number has been compromised, there’s a chance someone could try to open a credit card or loan in your name. Freezing your credit is free. You can go to AnnualCreditReport.com to start the process.