Tax scams still pose a risk after you file your taxes. Key details and how to protect yourself
Even after you finish filing your taxes, phony IRS calls and other nefarious scams will intensify.
- Coauthor of Uninvested (Random House, 2015)
Tax season means an onslaught of tax scams to try to dupe you.
Tax Day 2021 is coming up. You may have filed your taxes already, since the IRS has been accepting returns since Feb. 12. As you relax a bit and start to check your refund status, don't get too complacent. Fraudsters are still hard at work trying to scam or trick tax filers out of their personal information and refunds.
Sending spam text messages with links to phishing websites and using automated robocalls in a bid to fool you into giving up personal information is just some of what these bad actors will try.
The IRS takes tax fraud and scams seriously and does its best to warn us. In fact, there's an entire section of the IRS website dedicated to issuing warnings about popular scams and providing strategies for staying out of scammers' crosshairs.
Here's a shortlist of some of the most common scams making the rounds -- and what to do to keep both your identity and tax return safe and secure, including reporting the trick to the IRS.
Read more: Best tax software: TurboTax, H&R Block, TaxSlayer and more
1. The fake IRS phone call
How it works: One of the most brazen schemes used every year is scammers calling and claiming to represent the IRS to taxpayers and demand an immediate tax payment. Calling from a phone number that appears to belong to the IRS on your caller ID, they will threaten, badger and intimidate you into making a rash decision. Usually they will often ask for a transfer of funds by gift card or wire transfer. Thieves are increasingly extending this scheme to email and social media channels.
How to protect yourself: Know that the IRS will never phone you or show up at your house to demand an immediate payment -- especially via gift card or wire transfer. Though debt collectors have been known to get pushy, an IRS representative should never berate, abuse or threaten to bring in law or immigration agencies.
Tax scams can occur in multiple ways, including over the phone.
If someone claiming to work for the IRS calls you, the IRS says you should write down the number you received the call from, the name of the caller and then hang up. You can then call the IRS directly at 1-800-829-1040 or visit irs.gov/balancedue to view your account.
Report a scam phone call with the Treasury Inspector General for Tax Administration by calling 1-800-366-4484, or at tigta.gov. You can also call the Federal Trade Commission at 1-877-FTC-HELP or visit ftc.gov/complaint.
2. The surprise refund bait-and-switch
How it works: In the words of the IRS, this is a "new twist on an old scam." After criminals have secured your sensitive personal information, such as Social Security numbers and tax forms, they can easily file a fraudulent return on your behalf.
The IRS has issued several alerts and warnings about common scams that all want to take your money.
Once the funds hit your bank account, the scammers, impersonating someone from the IRS or a collection agent, will contact you to demand the return of the ill-gotten money -- either by depositing into an account or sending it to an address.
How to protect yourself: Be on the alert for an unexpected tax bill, refund or messages from the IRS or your tax preparer about multiple returns filed using your Social Security number. If you get an erroneous refund, don't go out and make a major purchase -- the IRS will want its money back.
If you suspect you're a victim, file a complaint with the FTC. Request that the major credit bureaus put a "fraud alert" on your record, and contact the IRS at 1-800-908-4490.
3. Cancel or suspend your Social Security number
How it works: Criminals are making calls and threatening to suspend or cancel your Social Security number until your overdue taxes are paid. The scam may seem legit because the caller has some of your personal information, including the last four digits of your SSN. But as the IRS puts it: "Make no mistake... it's a scam."
Phishing scams are an easy way to gain information about you, and in turn, gain access to your online accounts or tax information.
How to protect yourself: If someone calls and threatens to cancel or suspend your Social Security number, hang up immediately. If they call back, don't answer. Write down the number and then report the call on this site, and send an email with the subject of "IRS Phone Scam" to phishing@irs.gov and include the phone number, as well as any other details that are relevant, in the body of the email.
If you do owe taxes, you can call the IRS at 1-800-829-1040 to discuss your payment options. Your Social Security number will not be canceled or suspended.
4. Phony texts, emails or social media messages
How it works: Thieves have had years to refine their email trickery and have recently expanded into text messages and social media messages. Phishing scams have become much more sophisticated, with incredibly authentic-looking messages sent from credible-looking addresses that dupe victims into sharing sensitive information or installing malware.
Fake text messages that include links to unsafe websites are on the rise.
One particularly bold gambit involves scammers using the IRS name and logo to warn taxpayers about the very scam they're perpetrating, before soliciting sensitive personal information. Note that attackers are increasingly targeting tax professionals in addition to taxpayers.
How to protect yourself: Be wary about any communications you receive over email, text message or social media purporting to be the IRS, a tax professional or any other financial organization. Again, the real IRS will never initiate contact to request personal or financial information.
If you do receive such a message, the IRS asks that you forward it to phishing@irs.gov. Do not reply to the original message.
Scammers' tactics are always evolving
The IRS has a dedicated Tax Scams webpage where the agency publishes warnings and updates about the current crop of scams that are being used. Additional scams the IRS has issued warnings for include "ghost tax preparers" who charge someone to do their taxes, often based on a large refund amount, and then fail to mail in the tax return -- leaving the customer with an unfiled tax return and no refund.
There's also a warning for a tax transcript scam that targets businesses with an Emotet malware-infected file attachment.
The biggest takeaway here is this: If the IRS needs something from you, you'll receive a letter in the mail. You won't get an email, phone call or text message. Even still, letters can be faked, so it's best to use only official IRS websites and phone numbers.
In addition to preventing your tax information from being compromised, it's also a good idea to use a password manager, use two-factor authentication wherever possible and learn how to identify robocalls.