Skip to main content, skip to search, or skip to the top of the page.

Tax Scams and Frauds

Keep Up with Ever-Evolving Tax Scams to Avoid Being a Victim
by Colton Kopcik
Posted: 3/24/2021

It is no secret we are living in the golden age of technology as we rely on computers, devices, and other tech to live our daily lives. Increased access to technology and the onset of the COVID-19 pandemic have given tax scammers a unique opportunity to take advantage of us. It seems every year criminals change tactics to steal our information, tax refunds, or cause other harm. Let us stay ahead of the curve and prevent tax scammers from gaining access to our information or funds by remaining vigilant. Beware of recently reported scams and know that the IRS will NEVER initiate contact with taxpayers seeking information through email, text, or social media channels. If it seems suspicious, there likely is a good reason for that suspicion.

It is crucial, in the age of technology, to protect your personal data across all of your devices. Personal information security is necessary to prevent being a victim of scams, identity theft, and other forms of improper information use. Make sure you are not providing social security numbers, bank account information, or credit card numbers to just anyone – always verify. One of the most basic steps you can use is to employ strong passwords. Think of something no one would be able to guess about you. Avoid maiden names, street names, children’s birthdays, or any other easily identifiable labels. Remember to occasionally rotate your passwords, this will help prevent criminals who have your information and are waiting to use it from doing so. Be sure to also password protect and encrypt your wireless networks. An unprotected wireless network will allow any computer in range to access the network and potentially obtain sensitive information. Remember that no system is completely secure, make sure your passwords and other information are protected by keeping separate copies on removable discs or backup drives (This includes all of your federal and state tax returns).

Beware of Fraudulent Notices

Scammers will often send fake notices to taxpayers’ homes. These notices look very real and will likely include accurate information regarding your assets, finances, or other personal information. Some personal details including liens, levies, and possibly even the amount of tax debt are public record. This means that the scammers can use this information to make their fraudulent documentation appear more official. Beware of notices not bearing the official Internal Revenue Service seal. The real IRS will only seek payment to the United States Treasury. The documents may say that they are the “Federal Tax Authorities” or they are with the “Tax Processing Unit.” The main takeaway is to keep in mind that while the notice may contain accurate information it can still be, and likely is, fraudulent. See below for examples of a fraudulent notice. Notices will refer to a very general "tax department," but not necessarily as direct as "IRS," but may include accurate debt information. While these fraudulent notices look official, a close read will reveal many warning signs. The lack of a government seal, only an “agent” signature, and the notices general threatening nature.

Physically Protect Your Documents

As a quick aside, it is very important to make sure your tax documentation and all other important financial/personal information are kept in a safe location. The IRS, as tax issues arise, may require you to submit documentation, receipts, or paperwork for several years in the past. The general rule is to keep your paperwork for at least the previous 6 years. Michigan State Tax Clinic Director and Professor Joshua Wease famously said, “The scourge of American tax audits are floods and burst pipes.” There are countless instances of taxpayers losing all of their important information due to water damage in a flood. Make sure your tax documents are not stored on the ground, near the sump pump, or in any other precarious location. A safety deposit box, firebox, or some other safe location is a much better choice for this important paperwork.  

How to determine if the IRS is really at your door

If the IRS visits you, they will always show you two forms of official identification called a pocket commission and an HSPD-12 card. You have the right to see both of these and should require seeing them before discussing anything with the individual. Should you want to verify the information the agent will provide a dedicated IRS telephone number for you to call. An agent at your door will never demand you make a payment to him, her, or any other entity except the United States Treasury. For more information on identifying the IRS at your door, please visit the following link.

https://www.irs.gov/newsroom/how-to-know-its-really-the-irs-calling-or-knocking-on-your-door

Taxpayer Advocacy Panel Scam

It has been reported that taxpayers are receiving emails that appear to be from the Taxpayer Advocacy Panel (TAP) about a potential tax refund. These emails are a phishing scam, trying to trick victims into providing personal and financial information. Do not respond or click any link. If you receive this scam, forward it to phishing@irs.gov. TAP is a volunteer board that advises the IRS on systemic issues affecting taxpayers. It never requests and does not have access to, any taxpayer’s personal and financial information.

Beware of Fake Charities

Criminals will often exploit natural disasters and other circumstances like the COVID-19 pandemic by setting up fake charities to collect money. These schemes usually begin with unsolicited contact via phone, email, social media, or other means. Taxpayers should be particularly wary of charities with names similar to nationally known organizations. Legitimate charities will provide their Employer Identification Number (EIN), if requested, which can be used to verify their legitimacy. When in doubt, a quick google search will help determine if a charity is legitimate. You can also try asking them to send you a donation form in the mail, if it is a scam they will likely refuse this request.

Beware of the “Impersonator”

Criminals have been increasingly calling taxpayers posing as "upper-level" agents within the IRS. They try to demand immediate payment and use urgency as their main weapon to instill fear and catch you off your game. The IRS will never threaten a taxpayer or make a surprise demand for immediate payment. Scam phone calls, including those threatening arrest, deportation, or license revocation if the victim does not pay a bogus tax bill, are reported year-round. These calls often take the form of a "robocall" (a text-to-speech recorded message with instructions for returning the call).

Scams Related to Economic Impact Payments

Criminals have begun stealing economic impact payments from taxpayers as distributed through the Coronavirus Aid Relief (CARES ACT). Much of this stems from identity theft whereby criminals file false tax returns with stolen information or supply other fake information to the IRS to divert refunds to wrong addresses or bank accounts. The IRS recently warned nursing homes and other care facilities that Economic Impact Payments generally belong to the recipients, not the organizations providing the care.

Scams Targeting Non-English Speakers

IRS impersonators and other scammers also target groups with limited English proficiency. These scams are often threatening in nature. Some scams also target those potentially receiving an Economic Impact Payment and request personal or financial information from the taxpayer.

Phone scams pose a major threat to people with limited access to information, including individuals not entirely comfortable with the English language. These calls frequently take the form of a "robocall" (a text-to-speech recorded message with instructions for returning the call), but in some cases may be made by a real person. These con artists may have some of the taxpayer's information, including their address, the last four digits of their Social Security number, or other personal details – making the phone calls seem more legitimate.

A common one remains the IRS impersonation scam where a taxpayer receives a telephone call threatening jail time, deportation or revocation of a driver's license from someone claiming to be with the IRS. Taxpayers who are recent immigrants often are the most vulnerable and should ignore these threats and not engage the scammers.

Beware of Malicious Tax Return Preparers

Choosing a skilled and professional tax return preparer is crucial to avoiding scams. Tax preparers are given access to your personal and confidential information and therefore, are in a prime position to cause you tax harm. The vast majority of tax preparers are honorable, professional, and highly skilled at their trade. However, we must be on the lookout for those with malicious intent. Taxpayers should avoid so-called "ghost" preparers who expose their clients to potentially serious filing mistakes as well as possible tax fraud and risk of losing their refunds. With many tax professionals impacted by COVID-19 and their offices potentially closed, taxpayers should take particular care in selecting a credible tax preparer.

Ghost preparers don't sign the tax returns they prepare. They may print the tax return and tell the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost preparer will prepare but not digitally sign as the paid preparer. By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a Preparer Tax Identification Number (PTIN). Paid preparers must sign and include their PTIN on returns.

The Bottom Line

Tax scams come in all shapes in sizes, if something seems suspicious to you – it is probably for good reason. Always verify who you are speaking with on the phone. Remember that the IRS will never threaten you or demand immediate payment over the phone, online, through social media, or otherwise. If someone is making you uncomfortable over the phone, hang-up and call the IRS directly and they can verify if someone you were speaking with was actually with the IRS. Every employee with the IRS has an ID number, ask for it – they should be able to recite it without hesitation. It is important to stay vigilant against scammers as technology continues to evolve. Your caller-ID may say Internal Revenue Service, US GOV, or another official title – this does not mean that it is true. The best way you can protect yourself is to never give your personal information out. In this age of technology, we are tasked with defending ourselves from scammers who are becoming bolder and prey on people who do not keep up with the latest tactics.

IRS warns university students and staff of impersonation email scam

Psted: 3/30/2021

The Internal Revenue Service today warned of an ongoing IRS-impersonation scam that appears to primarily target educational institutions, including students and staff who have “.edu” email addresses.

The IRS’ phishing@irs.gov has received complaints about the impersonation scam in recent weeks from people with email addresses ending in “.edu.” The phishing emails appear to target university and college students from both public and private, profit and non-profit institutions.

Taxpayers who believe they have a pending refund can easily check on its status at “Where’s My Refund?” on IRS.gov. 

The suspect emails display the IRS logo and use various subject lines such as “Tax Refund Payment” or “Recalculation of your tax refund payment.” It asks people to click a link and submit a form to claim their refund.

The phishing website requests taxpayers provide their:

  • Social Security Number
  • First Name
  • Last Name
  • Date of Birth
  • Prior Year Annual Gross Income (AGI)
  • Driver's License Number
  • Current Address
  • City
  • State/U.S. Territory
  • ZIP Code/Postal Code
  • Electronic Filing PIN

People who receive this scam email should not click on the link in the email, but they can report it to the IRS. For security reasons, save the email using “save as” and then send that attachment to phishing@irs.gov or forward the email as an attachment to phishing@irs.gov. The Treasury Inspector General for Tax Administration (TIGTA) and IRS Criminal Investigation have been notified.

Taxpayers who believe they may have provided identity thieves with this information should consider immediately obtaining an Identity Protection PIN. This is a voluntary opt-in program. An IP PIN is a six-digit number that helps prevent identity thieves from filing fraudulent tax returns in the victim’s name. 

Taxpayers who attempt to e-file their tax return and find it rejected because a return with their SSN already has been filed should file a Form 14039, Identity Theft Affidavit, to report themselves as a possible identity theft victim. See Identity Theft Central to learn about the signs of identity theft and actions to take. 

 

IRS Warns of New Phone Scam Involving Bogus Certified Letters; Reminds People to Remain Vigilant Against Scams, Schemes this Summer

The IRS (and its authorized private collection agencies) will never:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. All tax payments should only be made payable to the U.S. Treasury and checks should never be made payable to third parties.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
  • Ask for credit or debit card numbers over the phone.

For anyone who doesn't’t owe taxes and has no reason to think they do:

  • Do not give out any information. Hang up immediately.
  • Contact the Treasury Inspector General for Tax Administration to report the call. Use their IRS Impersonation Scam Reporting web page. Alternatively, call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the FTC Complaint Assistant on FTC.gov. Please add "IRS Telephone Scam" in the notes.

For anyone who owes tax or thinks they do:

The IRS does not use email, text messages or social media to discuss personal tax issues, such as those involving bills or refunds. For more information, visit the “Tax Scams and Consumer Alerts” page on IRS.gov. Additional information about tax scams is available on IRS social media sites, including YouTube videos.

IRS Provides Tips on Determining If It’s Really The IRS At Your Door

IRS YouTube Videos:

The Internal Revenue Service has created a special new page on IRS.gov to help taxpayers determine if a person visiting their home or place of business claiming to be from the IRS is legitimate or an imposter.

With continuing phone scams and in-person scams taking place across the country, the IRS reminds taxpayers that IRS employees do make official, sometimes unannounced, visits to taxpayers as part of their routine casework. Taxpayers should keep in mind the reasons these visits occur and understand how to verify if it is the IRS knocking at their door.

Visits typically fall into three categories:

  1. IRS revenue officers will sometimes make unannounced visits to a taxpayer’s home or place of business to discuss taxes owed or tax returns due. Revenue officers are IRS civil enforcement employees whose role involves education, investigation, and when necessary, appropriate enforcement.
  2. IRS revenue agents will sometimes visit a taxpayer who is being audited. That taxpayer would have first been notified by mail about the audit and set an agreed-upon appointment time with the revenue agent. Also, after mailing an initial appointment letter to a taxpayer, an auditor may call to confirm and discuss items pertaining to the scheduled audit appointment.
  3. IRS criminal investigators may visit a taxpayer’s home or place of business unannounced while conducting an investigation. However, these are federal law enforcement agents, and they will not demand any sort of payment. Criminal investigators also carry law enforcement credentials, including a badge.

For more information, visit “How to know it’s really the IRS calling or knocking on your door” on IRS.gov.

The IRS reminds people who owe taxes – or think they do – to stay alert to scams that use the IRS as a lure. Tax scams can happen any time of year, not just at tax time. For more information, visit “Tax Scams and Consumer Alerts” on IRS.gov.

Taxpayers have a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore these rights and the agency’s obligations to protect them on IRS.gov.


Skip to main content, skip to search, or skip to the top of the page.