Tax Scams You Might Encounter This Filing Season
Updated Feb. 8, 2023 — Tax season means scams. Learn what to watch out for this time of year to protect your identity and your money.
According to the Federal Trade Commission, imposter scams accounted for more than $2.3 billion of the total $5.8 billion that consumers reported in losses in 2021. These most common types of scams run rampant during tax time, when criminals pose as tax preparers, the IRS and other government agencies to try to steal money and information.
Tactics commonly used in tax scams include:
- Phishing and other social engineering scams in which scammers pretend to be payroll companies, the IRS, government agencies and tax preparation companies.
- Fraudulent filings in your name leading to tax refund theft.
- False offers of tax debt relief.
- Unlawful claims and promises from illegitimate tax preparers.
Here's what these scams may look like in practice:
Messages From "the IRS" and OthersDuring tax season, you may receive emails, calls, texts or social media messages from scammers pretending to be the IRS, a tax preparation company like H&R Block, or a payroll company such as ADP. Impersonators might call and demand you repay a refund or insist you owe outstanding taxes that need to be collected immediately through a prepaid debit or gift card. Other communications may offer the option to see or download tax documents, verify personal information, claim a tax rebate or other benefit, and/or receive information about your refund. When you click on the link to access the info, you encounter a malicious file or are taken to a spoofed website.
Fraudulent Filings Using Your Stolen Identity
If a criminal has your personal information, they may successfully file a tax return using your Social Security number and claim your refund. As in many instances of identity theft, you might be unaware of the fraud and discover it only when you attempt to e-file and receive notice of a duplicate filing. In other fraudulent filing scams, the criminal sends the refund to your account and then poses as a collections agency or the IRS to demand you return the money.
False Offers of Tax Debt Relief
In these scams, fraudsters target consumers who owe back taxes with promises of tax bill relief at a huge discount, but for a large, upfront fee. Instead of reducing your tax debt, the fraudsters disappear with the fee you paid.
Fraudulent Tax Preparation
Criminals posing as tax preparers promise a larger than expected refund and charge a percentage fee based on the refund amount. To inflate your refund (and their fee), they illegally manipulate the income, deductions, expenses, etc. claimed on your return. They file your return without signing it themselves, as a real tax professional would, and therefore they aren't responsible when the IRS detects the fraud and reduces your return or even applies penalties.
Protect Yourself From Tax Scams
It's not unusual for a tax preparer or online tax service you've worked with to email or call you to promote their business. That can make it difficult to know what's legitimate. There's no perfect way to tell if any email related to your taxes is a trap. The best advice is not to click the links. Instead, go to the website on your own and log in from there. If you receive a phone call, hang up and call back using the phone number listed on the company's website.
- Remember, the IRS will not contact you by phone, email, text or social media, and they won't demand immediate payment or threaten jail time or arrest. If you receive a phone call from someone pretending to be the IRS, hang up immediately. This article explains how the IRS initiates contact with taxpayers.
- If you use a tax preparer, choose carefully. Make sure they sign your return as the preparer and include their Preparer Taxpayer Identification Number (PTIN) before you sign and submit your return.
- Be wary of anyone promising to help you resolve or reduce tax debt, offering surprising tax breaks or generous refunds, or insisting that you need a professional to help file tax debt relief requests with the IRS.
- If a fraudulent tax return is filed in your name and deposited to your bank account, use these IRS instructions for returning a tax return you weren't expecting.
Protect Yourself From Tax Identity Theft
The FTC advises consumers to follow these guidelines for protection from identity theft, during tax season and throughout the year:
- Always protect your Social Security number (SSN). Know exactly who you're sharing it with and why.
- File your tax return as early as possible. For information about your BECU tax statement, see Tax Statements FAQ.
- Use a secure internet connection while preparing and filing your taxes electronically. Alternately, complete a paper tax return and mail it from the post office.
- Don't hand over personal information without thoroughly researching a tax preparer.
- Keep an eye on your credit report. Check it for free once a year at annualcreditreport.com. Make sure no accounts have been opened in your name.