IRS Issues Urgent Warning on Surge in 'New Client' Scams

As scammers continuously devise new and deceptive methods to defraud the public, various organizations are issuing warnings emphasizing the importance of vigilance. With concerns already existing regarding tax payments, individuals find themselves susceptible to scams aiming to exploit their hard-earned money. As the 2024 tax season approaches, the Internal Revenue Service (IRS) and the Security Summit have issued a cautionary advisory regarding recorded tax scams to help individuals safeguard themselves against fraudulent schemes.

Decoding the "New Client" Scam

With the surge in tax scams coinciding with the approaching Income Tax Returns filing period, the Internal Revenue Service (IRS) has issued a warning to eligible tax-paying professionals. The IRS alerts that a new form of tax scam has emerged, specifically targeting accounting professionals and firms. This particular scam, termed the "new client" scam, tends to rise during the tax season, typically spanning from January to April.

In these instances, scammers adopt the guise of potential clients, posing a significant challenge for accounting professionals. Moreover, the IRS has already reported instances of such scams in action. The modus operandi involves fraudsters assuming the identity of legitimate taxpayers seeking assistance with their tax filings. They employ official-looking emails to solicit confidential information and pose queries to gain access to the client data of tax professionals.

Rising Concerns Over Tax Scams

IRS Commissioner Danny Werfel emphasized the complexity and severity of the emerging tax scams, highlighting the substantial risks they pose to both tax firms and their clients. In the past year, the IRS received a significant volume of reports concerning the "new client" scam, with over 400 complaints related to business email compromise (BEC) or business email spoofing (BES). It was disclosed that these scammers have ambitious plans, intending to victimize tens of thousands of taxpayers globally. 

How to Avoid the "New Client" Scam

In a "new client" scam, tax professionals may unknowingly download what appears to be a potential client's tax information or access a site purportedly containing such details. Cybercriminals exploit this to collect the preparer's email address, password, and potentially other sensitive information. They may also introduce malware onto the tax pro's computer to gain system access.

According to the IRS, the "new client" scam displays red flags such as awkwardly phrased sentences and unusual word usage. However, scammers, armed with stolen email account credentials, may leverage legitimate emails from a previous victim's account. These emails, free of grammatical errors and referencing seemingly authentic tax issues, are repurposed for the new client phishing scam. Subject lines often allude to the current tax season, with the underlying message expressing the sender's need for tax preparation assistance.

Tips to Avoid Such Scams

To combat these threats, individuals are advised to set up two-factor or multi-factor authentication with their email providers, reducing the risk of compromised email accounts. It is important to verify the identity of senders, especially if the email appears to be from a trusted organization or friend. Communication via independent methods, such as calling a known accurate number rather than one provided in the email or text, is encouraged.

To report such scams, individuals can forward unsolicited emails to phishing@irs.gov, including full email headers. Those experiencing financial losses due to tax scam incidents can report them to the Treasury Inspector General for Tax Administration (TIGTA), the Federal Trade Commission, and the Internet Crime Complaint Center. Furthermore, forwarding the email to the Internet Service Provider's abuse department is recommended.