Tax Phishing Scams: Don't Be A Victim!

As we head into the 2025 tax season, it's critical to stay vigilant against the latest crop of tax scams that are emerging. These scams have grown increasingly sophisticated in recent years, with fraudsters employing ever-more devious tactics to trick unsuspecting taxpayers.

Whether it's phishing emails claiming to be from the IRS, phone calls from scammers impersonating tax officials, or bogus websites set up to steal personal information, the threats are diverse and constantly evolving.

General Tips for Identifying Tax Scams

Spotting a tax scam isn’t really different from identifying any other type of phishing, smishing, or callback phishing scam. Here are some of the generic ‘red flags’ that might help identify tax-related scams.

Be wary of unsolicited emails, texts, or social media contact. The IRS will not send digital communications containing promises of assistance, notices of outstanding tax payments due, or requests to verify personal or account information.
Be suspicious of phone calls claiming you owe taxes, especially if they demand that you settle the ‘tax bill’ by sending gift cards, cryptocurrency, prepaid debit cards, or wire transfers.

Be alert to the use of fake websites that look like the real thing. All government websites end with .gov. (Example irs.gov)
If something is too good to be true, it probably is. Question any communication that promises either a large tax refund or a guaranteed refund when you currently owe money in exchange for a fee.

Five Common Tax Scams

Unfortunately, tax scams are all too common and take many forms. Some scammers pose as charities, trying to trick people into donating to fake causes. Others set up fraudulent tax preparation services, promising big refunds but instead stealing people's identities or financial information.

Fake Charities and Charity Impersonators

Criminals frequently exploit the public's generosity during international crises or natural disasters by setting up fraudulent charities. They usually try to obtain money and personal information, which can then be used to further victimize individuals through identity theft.

Fake charity promoters often use deceptive tactics such as emails, bogus websites, or spoofed caller ID to make their solicitations appear legitimate.

One way to avoid being a victim is to research a charity before donating. Sites like Charity Navigator or Giving Compass can help you with this, but keep in mind these lists may not be all inclusive.

Disaster Fraud

The "disaster fraud tax scam" is a scheme where scammers exploit people affected by natural disasters. These fraudsters often pose as helpful IRS agents or tax professionals, offering to assist the victim in filing inflated casualty loss claims on their tax returns. However, their goal is to steal personal information or money from the victims.

The scammers offer to help file inflated casualty loss claims on tax returns, often posing as IRS employees or promising large refunds. They may promise an unrealistically large tax refund to entice the victim.

However, their true motives are purely nefarious - to steal sensitive personal information like Social Security numbers that can be used for identity theft, or to collect bogus "service fees" while providing no actual help.

It is essential to verify the identity of anyone claiming to represent a relief organization in order to prevent falling victim to disaster fraud before taking any action. Also, never pay upfront for repairs, and be wary of unsolicited offers. Never share personal information unless you are absolutely certain of the legitimacy of the request. If you have any doubts, contact FEMA or local authorities to confirm the information. (Beware of FEMA Fraud and Scams) (Report Disaster Fraud)

W-2 Phishing Scams

There are at least two different types of W-2 scams used by fraudsters. The first one targets Chief Operating Officers, other high-level executives, and Human Resources staff using a technique known as business email compromise (BEC) or business email spoofing (BES).

While posing as one of these high level people, they send emails to payroll staff, simply requesting W-2 forms for all employees.

The fraudster may start with a casual email, asking something like "Hi, are you working today?" before requesting all employee W-2 information. In multiple reported cases, once the fraudsters obtained the workforce data, they quickly followed up by demanding a wire transfer.

Another W-2 scam is a phishing sent to an individual, trying to trick you into sharing your W-2 (personal) information, including your Social Security Number, salary, and home address.

To avoid W-2 phishing scams, never share this (or any) sensitive data via email unless you are absolutely certain the request is legitimate from your employer. Verify any request like this by directly contacting your Human Resources Department using known contact details rather than relying on the information in the email.

Be especially wary of emails that seem urgent or come from an unknown sender, as they may be attempts to steal your personal information. Avoid clicking links or downloading attachments from suspicious emails. (Report IRS Related Phishing Scams)

Unexpected Tax Bill Scam

The unexpected tax bill scam typically starts with an official-looking letter, email or phone call claiming to be from the IRS or your state tax agency. The message will say you owe a significant amount of unpaid taxes and demand immediate payment, often via wire transfer, gift cards or cryptocurrency. They may threaten serious consequences like wage garnishment, asset seizure or even arrest if you don't comply.

However, it's critical to recognize this as a scam. Legitimate tax agencies will never demand instant payment via those methods or make threats.

If you're unsure about the validity of a tax bill, contact the IRS or your state tax department directly using official contact info from their website. Don't fall victim to these fraudsters attempting to pressure you with scare tactics to steal your hard-earned money.

But don't be fooled - this is not how the IRS operates. Real tax agencies will always send bills by postal mail first, allow you to question the amount owed, and provide several payment options and appeal rights.

If you're still unsure if a tax bill is legitimate, contact the IRS directly using a verified phone number. And remember, the IRS will never demand a specific payment method or threaten to immediately bring in law enforcement.
(How to Avoid Unexpected Tax Bill Scams)

Fraudulent Tax Return Preparation Services

Tax preparer scams are a serious threat that can wreak havoc on your finances and even land you in legal hot water. These scammers often lure in victims with big promises of massive tax refunds, but their real goal is to make off with your sensitive personal information and hard-earned money.

They may have an official-looking storefront or website to give an air of legitimacy, but don't be fooled. Once they have your info, fraudulent tax preparers can file false returns in your name, pocket the inflated refunds, and vanish without a trace, leaving you to deal with the fallout.

Victims may face not only the loss of their tax refund money, but also find themselves on the hook for back taxes, penalties, and interest when the IRS discovers the fraudulent return.

The consequences can be catastrophic to your financial stability and reputation. That's why it's so critical to be cautious about who you trust with your taxes.

Always verify the credentials and reputation of any tax preparer, and be extremely wary of anyone promising unbelievably high refunds or encouraging you to include false information. When in doubt, trust your gut - if a tax prep offer seems too good to be true, it almost certainly is.

To report suspected tax preparer fraud, go to IRS.gov and fill out their Form 14157.

What to do If You Suspect You're a Victim

If you believe you've fallen victim to a tax scam, it's crucial to take swift action to protect yourself and minimize potential damage. The first step is to contact the IRS directly to determine if there is any legitimate issue with your taxes. You can call the IRS helpline or visit their official website for guidance. (Report a Tax Scam or Fraud)

If you did not initiate the contact and the supposed IRS agent is demanding immediate payment, especially via gift card, wire transfer, or cryptocurrency, this is a clear red flag of a scam.

Please don't share any personal or financial information. Report the scam attempt to the proper authorities, such as the Federal Trade Commission, your local police department, and the IRS. (Report Fraud, Federal Trade Commission)

Consider placing a fraud alert on your credit records and closely review your account statements and credit reports for any suspicious activity. Consider enlisting the help of a qualified tax professional to ensure your taxes are in order.

Remember, the IRS will never demand immediate payment or threaten arrest over the phone. By staying vigilant and taking appropriate measures, you can protect yourself from falling victim to nefarious tax scam predators.

Conclusion

Tax scams are a pervasive problem that can have serious financial and legal consequences for individuals and businesses alike. It's crucial to stay vigilant and informed to protect yourself from falling victim to these schemes.

Be wary of any unsolicited communications promising easy money or demanding sensitive personal information. If an offer seems too good to be true, it probably is. Stick with reputable tax professionals and official government resources when it comes to handling your taxes.

If you get targeted by a scammer, report it right away to help prevent others from being victimized. With some common sense and caution, you can steer clear of tax scams and have peace of mind during tax season and beyond.