How to protect yourself from common tax scams

Unless it’s a physical letter from the IRS, you should be suspicious of it.

Derek Silva

Derek Silva

Published May 1, 2020

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KEY TAKEAWAYS

  • Almost all IRS communications happen by mail, through the USPS

  • Never share sensitive information through phone calls, text messages, or emails unless you know the person is legitimate and it was you who contacted them

  • Tax scams are most common during tax season, but they happen year round

  • Report all scams to the Treasury either through their online form or over the phone; you can also file a complaint with the FTC

New tax scams emerge every year, but most work very similarly: Someone contacts you to say you owe a tax bill and need to send them money. A scammer may ask for personal information, like your bank account number, Social Security number, or something written on your W-2. Many scammers claim to be from the Internal Revenue Service (IRS), the Treasury Department, a tax preparer’s office, or even from your own company’s HR department. They may call you, text you, email you, contact you through social media, or even visit you in person.

If anyone contacts you asking you to send them money, don’t do it. Nearly all IRS communication happens through physical mail and you should be suspicious emails or calls claiming to be from the government. The IRS will never call or email you to demand a payment and even if you do owe tax debt, you always have the right to question or appeal the amount you owe by contacting the IRS. If you think something is a scam, report it to the Treasury Inspector General for Tax Administration (TIGTA).

Other common tax scams involve identity theft, with someone filing a fake tax return under your name so they can get your tax refund. To help protect yourself, file your tax return as early as possible. Fake tax preparers, which the IRS calls ghost preparers, may also take advantage of unsuspecting taxpayers by taking their refunds or by inflating their refunds with fake numbers.

In this article:

Tax return fraud

One common tax scam involves identity theft: someone uses your information to file a fake tax return for you so that they can steal your refund.

To protect yourself, file your tax return as soon as possible so scammers don’t even have the chance to file a fake return. You should also take general precautions when submitting your personal information online. Check to see that a website is secured (look for “https” instead of just “http” in the url) and don’t share information that doesn’t seem necessary or relevant. Don’t use the same password for every site, and log out whenever you’re done on a website.

There are two ways you can tell if someone stole your tax refund:

  • You e-file your tax return and the IRS rejects it, saying that it has already received a return from you.
  • The IRS sends you a physical letter, labelled as Letter 4883C, saying it has received a suspicious return using your name. You will need to call the Taxpayer Protection Program — by using a toll-free number listed in the letter — to confirm your identity and discuss next steps.

What to do if you’re a victim of refund fraud

It’s important to remember that if someone filed a fake tax return for you, you are a victim of identity theft. You should consider general steps to protect yourself, like freezing your credit, contacting your credit card company for a new card, notifying your bank, and changing your passwords.

In order to file your actual tax return, attach IRS Form 14039, Identity Theft Affidavit. This tax form tells the IRS that someone has filed a fake return for you. You’ll need to enter your contact information, other personal information including your SSN, and a short explanation of why you’re attaching this form. You may be able to fill out the form through your normal tax filing software, but you will need to mail or fax your return to the IRS. You cannot submit it online.

When the IRS receives your return, the Identity Theft Victim Assistance organization (IDTVA) will look into your case. Most taxpayer fraud cases are resolved within 120 days, but complex cases could take 180 days or more.

Related article: How to recover a lost refund tax check

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Phone scams

Phone calls have been a popular method for scammers for decades and they’ve become more sophisticated as technology has advanced. They often target immigrants and seniors, so it’s important to know that IRS agents cannot revoke your driver’s license or immigration status. In 2016, there was a prevalent phone scam targeting college students, asking them to wire transfer money for a “federal student tax.”

The IRS will never call demanding a payment. IRS calls are uncommon in general and don’t happen unless the IRS has already sent you a letter or otherwise been in contact with you. For example, you may get a call to confirm the time of an audit appointment. If you're unsure whether a call is real, hang up and call the IRS yourself.

What phone tax scams look like

Someone will call saying they’re from the IRS, the Treasury Department, a tax preparation service, or your company’s human resource department. They’ll instruct you to provide personal information or payment information over the phone. It is possible that your caller ID will say the call is from the IRS, and the caller may know quite a bit of your personal information already.

The caller will usually say that you need to pay money through a specific method, like with a credit card, prepaid debit card, or even iTunes gift card. They may threaten to contact your local police or to take legal action against you if you don’t pay your tax bill immediately.

What you should do with phone tax scams

If someone calls and says they’re from the IRS or Treasury, here’s what you should do:

  • Don’t give them any of your personal information.
  • Ask for the caller’s name and call back number.
  • Hang up.
  • If you know that you don’t owe a tax bill to the IRS, report the call by either filling out the IRS Impersonation Scam Form or calling 1-800-366-4484.
  • File a complaint with the Federal Trade Commission and add “IRS Telephone Scam” as a comment in your complaint.
  • If you do owe a federal tax bill or if you’re unsure whether you do, contact the IRS at 1-800-829-1040 to see if the call was legitimate (and to learn more about your payment options).

Phishing and email scams

Email tax scams work very similarly to phone scams. Someone will usually email you claiming to be from the IRS, and they will ask you to either send personal information or click on a link so that you can enter information on their site. Fake emails requesting that you share personal information are also referred to as phishing scams. A phishing email may ask for bank account numbers, PINs, credit card numbers, your SSN, a copy of your W-2, or other financial information.

The IRS will never send you an unsolicited email. It may send confirmations or updates — like to confirm that it received a payment you already made — but the IRS will never ask you to share information or make a payment through email. Do not click on any links and do not reply to these emails.

In recent years, tax email scams have claimed to be from the Taxpayer Advocacy Panel (TAP), company CEOs, and company HR departments. Another common email scam — especially to company email addresses — has the term “tax transcript” or “tax account transcript” in the subject.

What you should do with email tax scams

If you ever get a fraudulent email (or text message) from the IRS or Treasury, report it by sending an email to phishing@irs.gov. If you have already responded to a fraudulent email, you should report the scam through the same IRS Impersonation Scam Form as you’d report a phone scam.

In-person IRS scams

A bold fraudster might visit your home claiming to be an IRS agent. Legitimate in-person visits from the IRS are uncommon and unannounced visits are even less common, so you should always be suspicious. IRS impersonators may bully you or threaten legal action, but don’t give them any of your information.

How to identify a real IRS employee

If an IRS representative ever visits you, they will always give two forms of identification: a pocket commission and an HSPD-12 card (sometimes caled a PIV card). You have a right to see both of these. The person will also provide an official IRS phone number you can call to verify their credentials.

Pocket commissions show the person’s official credentials, and look similar to a folded wallet with an upper and lower laminated pocket. (You may recognize these from movies.) An HSPD-12 card looks more like a regular ID card. It will list the person’s name, the department they’re from, and it will have the card’s expiration date in big font.

There are also only a few reasons why an IRS employee may visit you:

  • An IRS collection employee may visit you to collect tax debt, but they will never ask you to make a tax payment to anyone other than the “United States Treasury.” You also have the right to appeal the amount with the IRS.
  • IRS employees conducting a tax audit may visit you, but the IRS will always send you a letter first. It’s unlikely someone will visit for an audit unless you already have an appointment.
  • An IRS criminal investigator may visit your home during a criminal investigation, but they will never request a payment of any kind and you shouldn’t give them your sensitive information — like bank account numbers or your SSN — unless you know they’re legitimate.

Report all scams to the Treasury either online or over the phone, just as you would with the previous types of scams.

Tax preparer scams

When you work with a tax preparer, it’s important to work with someone legitimate. There are instances where tax preparers scam their customers by taking customers’ tax refunds. The IRS calls these fraudsters ghost preparers.

To protect yourself, always work with someone who has a preparer tax identification number (PTIN). These numbers are assigned by the IRS and a legitimate preparer will gladly share theirs. You can confirm that someone’s PTIN is real by using the IRS’ online tax preparer database. If you cannot confirm that someone’s PTIN is real, find a different tax preparer.

Here are some other measures you should take:

  • Never sign a blank tax return.
  • Never send your refund to the tax preparer’s address or bank account.
  • Avoid any tax preparer whose cost is determined as a percentage of your tax return.
  • Don't ever agree to use false numbers to inflate your tax refund.
  • Get a receipt for your payment to the preparer and beware of anyone who requires cash payment.
  • Always look over a tax return before it’s sent to make sure your personal information, address, and bank account are correct.

Learn more about how to choose a tax preparer.

Charitable donation scams

Another common tax scam happens when a scammer creates a fake charitable organization. Then you try to deduct the charitable donation on your tax return, only to get in trouble with the IRS for falsely claiming a deduction.

This type of tax fraud is so prevalent that the IRS launched an International Charity Fraud Awareness Week in 2019. Charity scams are especially common after hurricanes, other natural disasters, and newsworthy events like the coronavirus pandemic.

Related article: Will the coronavirus affect your taxes?

How to protect yourself from fake charities

Charitable organizations that are eligible for a tax deduction are registered with the government. You can look up an organization through the IRS’ Exempt Organization Select Check tool.

Always look up an organization if you haven’t heard of it before. Even if you recognize the name, double check that your payment is going to the correct place. Clever fraudsters may use name recognition for major charities to get people to send money somewhere with a similar-sounding name.

For extra protection, always make sure you get a receipt. You may want to avoid cash donations and instead use a method with a clear “paper trail,” like your credit card or a payment service such as PayPal.

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