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How to Avoid Tax Scams

It’s that special time of the year when millions of Americans examine their annual past earnings and finances. The final deadline to file your tax return this year is April 15, 2021.

With some getting refunds, tax season is also theft season. Tax-related identity theft occurs when someone uses your stolen personal information, including your Social Security Number, to file a tax return claiming your refund.

In addition, scammers will use tax season as an opportunity to commit fraud. Scammers pretend to be the IRS asking consumers for cash, or asking consumers to convert cash to gift cards, which is an easy way to transmit cash without the possibility of detection when the card is used. Protecting your identity is critical year-round but especially important during the busy tax season.

IRS Phishing or Phone Scams

Scammers use computers to dial thousands of phone numbers, pretending they’re calling from the IRS, hoping to find victims who respond to their threatening statements. These criminals claim you owe taxes and demand that you pay immediately, usually with a gift card or prepaid debit card. Other calls will try to scare taxpayers with possible arrest or “blacklist” of their accounts if they do not return the funds.

Some scammers send out emails, pretending they are from the IRS. The imposters may use part of your real identity to convince you that their claim is valid. They will tell you that you owe taxes and demand that you pay up or face prosecution. Or they will ask you to verify that you have paid your taxes, asking for personal information and bank account numbers to obtain data that can be used later to commit identity theft.

According to their website, the IRS initiates most of its communication through regular mail delivery. They’ll send out several mail notices before making a phone call or a visit to a taxpayer. The IRS does NOT initiate contact with taxpayers via phone. The IRS does NOT initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.

It’s also important to note that the IRS does not demand immediate payment through prepaid debit cards, gift cards, or wire transfers. They will also allow you the opportunity to appeal amounts owed or balances due before receiving your payments or returned taxes. Any sort of threat or rapid demand to have your funds returned can be a clear indicator that you are dealing with a possible scam.

Learn more about how to identify and avoid phone scams.

Tax Refund Theft

Criminals will gather or purchase your stolen personal information, create a bogus tax return and file the return with the IRS, claiming your refund. When you then file your legitimate return by mail, the IRS will send you a notice or letter saying that more than one return was filed for you. If you try to e-file, the IRS will reject your tax return as a duplicate filing. In either case, you are left with the difficult task of convincing the IRS that it wasn’t you that filed the return and received the refund the first time.

Avoid Tax Scams with These Tips

  1. Take notes. Make sure to record the supposed employee’s name and ask for a phone number so can call them back.
  2. Save the original voicemail or email sent by the supposed employee to report back information to the IRS.
  3. Don’t open any attachments or links if you receive an email claiming to come from the IRS. This could potentially contain malware and infect your personal computer.
  4. Look for form numbers written on letters and search for them on the IRS’s website. If the letter is legitimate, it will pop up on the IRS search engine with instructions on how to respond to the letter.
  5. Don’t respond. Sounds simple enough, but ignoring the phone call or email is often your best bet. Follow your instinct: if something doesn’t feel right, it’s best to ignore it and contact the IRS through their official website.

Contact and Report Scammers

If you suspect you've been contacted by a scammer posing as the IRS, The IRS lists ways to contact and report possible scammers below:

  • Suspicious emails, notices, letters, text messages or faxes can be forwarded to phishing@irs.gov.
  • To determine if an official IRS employee has contacted you, members can call (800) 366-4484.
  • To determine if an official letter or notice was sent out to you the IRS encourages people to call (800) 829-1040 or search their database.
  • For text messages received by a supposed employee, the IRS suggests reporting these occurrences by forwarding the phone number and message to (202) 552-1226. Once done, immediately delete the message.

If you have questions or concerns about tax-related scams, call your local IRS office or go to IRS.gov to learn more.

Worried about other scams?

Read More About Other Types of Fraud