Recent Tax Scams: Be on the Lookout

The IRS frequently warns both tax professionals and taxpayers of the rise in tax scamming incidents. In recent years, personal information and millions of dollars have increasingly become compromised due to scams. Scammers have become smarter over the years, employing regular telephone numbers, email addresses, and mail to deceive their targets. Let’s take a look at some ways scammers are tricking their victims and what steps to take if you notice something’s awry.

First and foremost, remember that the IRS will never initiate contact with taxpayers by email, text messages, or social media channels as a means of requesting personal information. Emerging scamming methods have come to the forefront this summer and are expected to remain prevalent for quite some time. The IRS will never threaten taxpayers with lawsuits, imprisonment, or other enforcement action.

Scams Targeting Taxpayers:

As the IRS is the official revenue service of the United States federal government, there will always be a formal method of communication. Furthermore, they will typically provide substantial warning in advance for any issues that might arise. A call demanding immediate payment via pre-paid debit cards, gift cards, or wire transfer is the work of a scammer. The IRS will normally mail a letter to the individual with a tax balance. All tax payments should be made payable to the U.S. Treasury. Checks should never be mailed to third parties and credit or debit card numbers should never be given over the phone. Immediate threats to bring in the local police or other law enforcement officers without prior notice and without the opportunity to question or appeal the amount is never done by the IRS.

  • IRS Impersonation Calls:
    • A new scam has come about lately using the Electronic Federal Tax Payment System (EFTPS), where scammers call to request immediate payment via pre-paid debit card. The caller then threatens arrest if there payment is not made. They also warn not to contact their tax professional, attorney, or any IRS office until payment has been sent.
    • There is also a phone scam targeting taxpayers with limited proficiency in the English language. The caller ID may be altered as well to put on the façade of a legitimate IRS phone number. They demand payment through a pre-paid debit card or wire transfer. If the phone is not answered, the caller may leave an urgent callback request.
  • Phishing:
    • When identity theft takes place over email, it is referred to as phishing. There has been a 400% increase in phishing incidents in the 2016 tax season. These phishing schemes may request information related to refunds, ordering transcripts, filing status, confirming personal information, and verifying PIN information. This may also occur via text message.

Scams Targeting Tax Professionals:

Tax professionals are being targeted as well at an increasing rate. These perpetrators are seeking personal and financial client information. With access to this information, scammers may appear more legitimate when calling taxpayers.

  • Phishing:
    • A new phishing email declaring that they are from a tax software education provider has become prevalent and typically requests a large amount of data. Information gathered through this scam will allow scammers to create fraudulent tax returns. The IRS makes it clear that official tax organizations and businesses will never request sensitive data via email. Samples of these phishing incidents show emails with lists of required information. Anyone handling taxpayer information has a legal obligation to protect this data.
    • Earlier this year, a report from the Security Summit warned tax professionals of a new scam request to “unlock” tax software accounts. The con artists impersonate software providers and contact tax professionals by email with “Access Locked’ in the subject line. They notify them that their access to tax preparation software has been suspended “due to errors in your security system”. The link included takes you to a fake webpage where you will be prompted to enter their username and password.