Tax scams have cost thousands of people millions of dollars. Tax scammers take advantage of mail, email, and phone correspondence to steal information from individuals, businesses, payrolls, and tax preparers.
Here are some things to watch out for this tax season to protect yourself from scams, collected from the official IRS’ website by TaxGlobal, just for you.
Don’t trust an email, text, or social media message from the IRS
The IRS will NEVER contact you via these channels, so if you get a message from the IRS asking for personal or financial information via email, text, or social media, report it as spam and don’t respond.
Watch out for a letter “in relation to your unclaimed refund”
You get a letter from the IRS telling you you have an unclaimed tax refund. The letter comes in a cardboard envelope, has the IRS’ info on it, and looks official. Don’t trust it. This is a scam. You do not have to do anything to claim your refund, other than file your tax return and pay your taxes owed.
Don’t fall prey to Employee Retention Credit scams
This refers to a real credit, the ERC or ERTC. But scammers may lie about who qualifies for the credit. If someone offers to help you claim this credit—in exchange for a fee, of course—turn and run. If you’re a business or tax-exempt organization with employees who has affected by COVID, you can check the actual requirements for this credit here.
Don’t use fake W-2 forms
Some scams say they can help you give fake wage information on your tax return in order to claim a bigger refund. Not only is this illegal, it won’t work. The IRS can spot a fake form, and you could get audited: a risk that’s not worth any extra money you might get from this scheme.
Avoid COVID-related scams
Many scammers will try to convince you that you qualify for pandemic-related credits. But if these people ask for your personal information, they’re simply trying to steal your identity and make a profit.
Look out for fake charities
Some scammers will pose as fake charities, or pretend to represent a legitimate charity. The “donations” they receive don’t go toward any charitable cause though, and those who give them money won’t be able to deduct the donation on their return. Always verify by researching the charity and checking the letter or email against information on the charity’s website.
Watch out for OIC Mills
An OIC Mill is a scammer who says they can help you settle with the IRS for “pennies-on-the-dollar.” They may urge you to resolve your tax debts through an Offer in Compromise (OIC) before your time runs out. These are all fake.
Be careful if you have a .edu address
If you study or work at a college or university, watch out for scammers impersonating the IRS. There’s a certain scheme that specifically targets people with .edu email addresses.
Don’t use a fake Form 1099-G
If you receive a Form 1099-G and you didn’t receive unemployment compensation, you may be the target of a scam to steal your identity and file fake unemployment compensation claims. Follow the steps on the IRS’ website if this happens to you.
Don’t give solicited aid to victims of natural disasters
Everyone wants to help those affected by a natural disaster, but if you get a suspicious letter or email asking you to help out by donating money, it’s likely a scam. You can always help by donating to legitimate charities instead.
Don’t work with ghosts
Ever heard of a ghost tax preparer? It may sound spooky, but it actually just refers to a tax preparer who doesn’t sign the returns the prepare. This is a major red flag, as it means the preparer is probably trying to profit off of you illegally, by offering to get you a huge refund or charging fees based on the size of your refund. A good tax preparer will sign their returns and only charge you the normal fee for their services, no matter what the size of the refund may turn out to be.
Other schemes
There are a few other schemes to watch out for that require longer explanations: phone scams, phishing scams, and Taxpayer Advocacy Panel email scams.
Phone
Recent immigrants are often the target of this scam, in which callers pose as the IRS and tell taxpayers they owe the IRS money. They even do tricky things like change their caller ID and use fake names and fake IRS IDs. They may know a lot about the taxpayer, and they may threaten them with arrest, deportation, or business or driver’s license suspension. The caller is often very aggressive and insulting. If you don’t answer, they may leave a message telling you to call them back on an urgent matter. If you’re deaf or hard of hearing, the callers may use video relay services (VRS) to try to trick you.
But here’s the thing: the IRS will NEVER call you to ask for your personal information, and they’ll never act aggressive or insulting. And you likely won’t have to worry about an arrest or deportation from the IRS, especially if this is the first time you’re hearing that you owe them money.
Specifically, the IRS will never:
Call you to ask for immediate payment
Ask you to use a payment method like prepaid debit card, gift card, or wire transfer
Threaten you with arrest or police involvement
Ask for your credit or debit card number over the phone
If you do owe money, the IRS will:
Send you a letter with a bill attached
Give you a chance to question the bill and appeal it
Allow you to pay online or via mail
Phishing
Phishing is a specific type of scam where a fraudster will send an email trying to trick you into giving away sensitive personal information. They’ll then use this to steal your identity.
Phishing emails may promise a refund or ask you to provide your personal information so they can confirm your filing status, send you a transcript, or verify your PIN.
These emails—which may also come in the form of text messages—do their best to look official by replicating the IRS’ logo and style. They may also try to pose as your tax professional. But there are some warning signs.
Don’t trust an email or text that:
Asks you to give personal information over email or text
Mentions Life Insurance and Annuity updates (the IRS doesn’t ask for these)
Contains a link to a fake website (compare the address against the IRS’ actual website: IRS.gov)
Tells you that “you are to update your IRS e-file immediately”
If you receive one of these, don’t click on any links and don’t reply. Instead, report it to the IRS by emailing phishing@irs.gov.
Taxpayer Advocacy Panel
If you get an email from the Taxpayer Advocacy Panel (TAP) that mentions a tax refund, you’ve been targeted by scammers. Again, don’t click any links and don’t reply. Instead, report it to the IRS at phishing@irs.gov.
TAP is a real organization, but it’s a volunteer board that gives advice to the IRS. It doesn’t work directly with individual taxpayers, and it will never ask you for any personal or financial info.