The IRS reports an increase in tax-related scams every tax season. Scammers are always developing new ways to target and profit off unsuspecting taxpayers.
The best way to defend yourself and your business is to be familiar with common tax scams and how scammers operate. Here are the most persuasive and dangerous tax scams to watch for and the appropriate actions to take if you fall victim to a scam.
1. Criminals impersonating IRS agents
In this scam, criminals will call taxpayers, acting as IRS agents. They will demand the victim pay a tax bill and send cash via wire transfer, prepaid debit card, or gift card.
They may also leave voicemails, urging the victim to call them back via robo-calls, or send urgent emails. The fake IRS agent may threaten arrest, deportation, or revocation of a driver’s license if the victim doesn’t send money.
These scammers may try various techniques – altering caller ID numbers, using IRS employee titles, creating fake badge numbers, or using a taxpayer’s personal information – all to sound official and get money.
If a scammer is targeting you:
- Hang up immediately. Don’t respond or provide any information.
- Report the incident to the Federal Trade Commission (FTC). You can use the FTC Complaint Assistant. Include “IRS Telephone Scam” in the notes.
- Go to the Treasury Inspector General for Tax Administration (TIGTA) website and report the call via their form. Or you can call 1-800-366-4484.
2. Receiving erroneous tax refunds
This is an updated version of an old scam. Criminals steal taxpayer data from tax professionals, file fraudulent tax returns, and use taxpayers’ real bank account information or addresses to deposit or send the refund.
Then, they use various methods to get the refund from taxpayers. Criminals may pose as debt collection agency officials, acting on behalf of the IRS. They may tell a taxpayer that the refund was an error and ask the taxpayer to send the money to the collection agency.
Or, the taxpayer might receive an automated call. The recorded voice will say he’s from the IRS and demand the taxpayer return the refund.
The voice may threaten the taxpayer with criminal fraud charges, an arrest warrant, or blacklisting their Social Security number. The voice will give the taxpayer a case number and telephone number to call to return the refund.
Here’s what to do if you’ve received an erroneous tax refund:
If the refund was a direct deposit:
- Contact the Automated Clearing House (ACH) department of the financial institution where the direct deposit was received. Ask them to return the refund to the IRS.
- Call the IRS to explain why the deposit is being returned. Call 1-800-829-1040 for individual taxes or 1-800-829-4933 for business taxes.
If the refund is a paper check and you haven’t cashed it:
- Write “VOID” in the endorsement section on the back of the check.
- Send the check to the IRS. Find the right IRS location, here.
- Include a note stating “Return of erroneous refund check because (give a brief explanation for returning the check).” Don’t staple, bend, or paper clip the check.
If the refund is a paper check and you’ve cashed it:
- Send a personal check or money order to the IRS. Find the right IRS location, here.
- Write the following on the check/money order: payment of erroneous refund, tax period for which the refund was issued, and your taxpayer identification number (Social Security number, EIN, or individual taxpayer identification number).
- Include the reason for returning the refund.
- If you don’t have a copy of the check, call the IRS and explain that you need information to repay a cashed erroneous refund check. Call 1-800-829-1040 for individual taxes or 1-800-829-4933 for business taxes.
3. Email, phishing & malware scams
In these types of scams, criminals will try to trick victims into revealing personal and financial information that will allow them to steal the victim’s identity and assets.
They may send an email that looks like it comes from a taxpayer’s tax professional, requesting information to complete and file an IRS form. These fraudulent emails may also ask for information related to refunds and the taxpayer’s filing status.
The emails may ask a taxpayer to verify certain information or confirm PIN information.
The IRS has also seen an increase in scammers using text messages to get this data.
Be skeptical of emails or text messages with links to websites that mirror the IRS’ official website. These emails aren’t from the IRS and may collect sensitive personal information.
They could also carry malware, which can infect computers and allow criminals to access files or view keystrokes.
If you suspect you’ve received a phishing message:
- Don’t click the link! Don’t open any attachments. Delete the email or text message.
- If the message seems to be from your tax professional, call them to verify they need this information. Ask if they sent the email. If they didn’t, delete the message and report it to the IRS.
- Report any phishing incidents to the IRS by forwarding suspicious emails to email@example.com
4. Requesting W-2 information from payroll or HR professionals
According to the IRS, this is one of the most dangerous scams used by criminals. More than 200 employers were affected by this scam in 2017.
Cybercriminals trick payroll personnel or individuals with access to their company’s payroll information to disclose sensitive employee information.
Cybercriminals identify a company’s CEO, executive, or someone in a position of authority and act as this person to request copies of Forms W-2 for all employees.
If the payroll professional sends the W-2 information, the criminals use it to file fraudulent tax returns or sell the data on the Dark Net. It may take multiple email exchanges before the criminal asks for the information.
Usually, the criminal will ask for a wire transfer after receiving the W-2 information.
If you’ve fallen victim to this scam:
- Notify the IRS of a Form W-2 data loss by emailing firstname.lastname@example.org The subject line should be “W2 Data Loss”. Don’t include employees’ personal information.
- Include the business’ name, the business’ EIN, your contact name and phone number, a summary of how the data loss occurred, and how many employees were affected.
If you receive a suspicious email and think it may be part of this scam:
- Verify the request by contacting the person who asked for the information via phone or in-person.
- If this isn’t a valid request, send the suspicious email to email@example.com with “W2 Scam” in the subject line.
- Don’t click on any links in the email. Don’t open any attachments. Delete and don’t respond to the message.
The IRS continually monitors and alerts consumers of popular, new, and dangerous tax scams. Your best defense is to stay aware and up-to-date on the latest tactics criminals are using to obtain personal identification information or tax money.
Stay vigilant and be skeptical of any unusual request, message, or phone call.
Visit the IRS’ Tax Scams/Consumer Alerts to stay on top of the latest scams.
Have questions about tax scams? Let’s talk!