It’s the Last Leg of the Tax Filing Season; Here Are a Few IRS Scams to Watch Out For

As the tax season reaches its closing phase, refund scams have become one of the most prevalent frauds. Criminals are preying on taxpayers who are stressed over filing. Last tax season in 2023, the Internal Revenue Service (IRS) flagged 2.4 million cases with fraudulent returns totaling $13.8 billion. This year, nothing seems to have changed as scammers are still targeting victims over the phone, text, online, or via the mail. Here’s a brief list of some of the recent IRS scams, and tips on how to spot them.

Unclaimed refund scam

The IRS has warned taxpayers about a new scam in which criminals are trying to mislead taxpayers by mailing them letters that say they are owed an unclaimed refund. As per the IRS, the scheme involves mail which has a letter with the IRS masthead and contact information. It also has a number that does not belong to the IRS. The letter says that it is in relation to an unclaimed refund.

Further to collect the refund, the letter typically asks taxpayers to email a picture of their driver's license and confirm their Social Security number with an IRS agent. The agent is fake and the taxpayer’s sensitive information is then stolen. The IRS has urged taxpayers to look for awkwardly worded requests in such emails. The request may read like, “A Clear Phone of Your Driver's License That Displays All Four (4) Angles, Taken in a Place with Good Lighting," as per the official release.

Furthermore, the IRS has stated that it will never reach out to people via unsolicited mail, emails, text messages, or social media, regarding a tax refund.

Fake identity theft alerts

In this scam, the criminals call the victims and pose as an IRS agent. The imposters create a fake sense of urgency by claiming that the taxpayer’s identity has been stolen and was used to open fraudulent bank accounts. The criminals then ask the taxpayers to buy certain gift cards or crypto and send them to the (fake) IRS agent so that they can protect them. After the payment is done, the caller disappears. Later, the caller gets back in touch and asks for the gift card access numbers.

The IRS has clarified that it will never ask for any payments, especially in gift cards, or cryptocurrency. Thus, a request for such payments is an automatic red flag that taxpayers should immediately report.

Phishing and IRS impersonator scams

Phishing scams are one of the most prevalent crimes and the IRS is not immune to them either. Scammers send fake text messages or phishing emails about tax refunds or recalculated rebates. They make these emails look like they’re from the IRS so that victims take them seriously. These emails and messages typically lure victims into clicking a malicious link and entering their sensitive information which is then stolen. Furthermore, a sophisticated phone scam is also targeting taxpayers. In the aggressive calls, scammers pose as IRS agents, using fake names and bogus identification badges to steal personal information or money. They may even claim that the victims owe money to the IRS and demand an immediate gift card or wire transfer. The IRS has clarified that it will never contact taxpayers by email, text message, or social media to get their personal or financial information.

Ghost tax preparer fraud

During the tax filing season, unethical tax return preparers become active and steal money from taxpayers. These ghost preparers claim they can get unusually large returns and sign up unsuspecting clients. They also avoid signing the tax returns they prepare and take an upfront fee instead of a percentage of returns. Thus, when the claims are rejected, these ghost preparers disappear.

The IRS requires all tax preparers to have a PTIN or a Preparer Tax Identification Number which only works if the preparers sign the forms they prepare. Thus, taxpayers are advised to make sure their preparers sign the documents and take a percentage of the returns they promise as a fee.