Top Scams To Watch Out For This Tax Season

Top Scams To Watch Out For This Tax Season

The days of filing paper tax returns are gone, and criminals are taking advantage. With taxpayers managing their sensitive information online, thieves are getting creative in finding new ways to scam victims digitally. One wrong click can cause tremendous damage that ends up earning bad guys a windfall. And the increased prevalence of artificial intelligence means tax scams this year will likely be more sophisticated than ever. In 2023 alone, the IRS reported $5.5B lost to tax fraud schemes.

W-2s and tax forms contain sensitive personal information that can be used for nefarious purposes, and scammers have an arsenal of weapons to deploy during tax season. Every year, there is a deliberate attempt to fool people into clicking malicious links by sending fraudulent emails and text messages that appear trustworthy. Many scammers employ schemes where they impersonate legitimate officials or professionals, making either threats or promises. The goals is the same – to have you give them money or access to it.

Here are examples of the scams to look out for this tax season:

Tax avoidance scams. These scams often promise rewards that are too good to be true. Scammers claim to have specialized knowledge on exploiting loopholes to avoid taxes or maximize returns. High-income filers are heavily targeted with tax avoidance scams through offers of seemingly legitimate annuities or tax shelters.

Refund scams. In this scam, a criminal will claim to be someone official notifying of a refund that was either unclaimed or calculated incorrectly, prompting the victim to share information – and possibly bank account numbers – to claim what is rightfully theirs.

Violation scams. This is a fear-based scam, where the criminal poses as an IRS official threatening some punitive action, claiming the victim committed a violation and needs to contact them to resolve the situation.

Filing support scams. Similar to tech support scams, criminals will offer support to help create IRS accounts to assist with the online filing process. Scammers also frequently pose as tax preparers and will go through the motions of gathering the victim’s personal information for tax forms they never intend to file.

Social media scams. Social media serves as a great place for criminals to find potential victims and carry out several different tax scams, fraudulently claiming to offer different types of services or possessing unique knowledge or access.

Recovery scams. Once a victim is scammed, criminals will try to strike again – believing they are gullible. They do this by contacting the victim with promises of helping them recover their losses and will leverage this as an opening to commit additional crimes, exploiting a time of vulnerability.

While it is not always easy to pick out a scam, here are indicators to watch for:

• Promise of a big pay out. If it sounds too good to be true, it probably is.
• Request for your account information. The IRS will never ask for your credit or debit account information over the phone.
• Random contact. The IRS contacts taxpayers by mail first and will never contact via a random phone call or other digital means. The IRS will not leave prerecorded, urgent or threatening voicemails.
• Demands or Threats. The IRS can’t revoke your driver’s license, business licenses or immigration status and cannot threaten to immediately bring in local law enforcement. Taxpayers are allowed an appeal process, so any message of “now or else” won’t come from an official channel.
• Request for you to click a weblink. Odd or misspelled web links can take you to harmful sites instead of IRS.gov.

The IRS recommends these best practices to protect against this tax fraud:

• Get an early start. File early so criminals have less opportunity (and time) to impersonate you.
• Set up a verified account. Set up your own IRS account before someone else can and use an Identity Protection PIN – a six-digit number known only to you and the IRS.
• Wait for written notice. Do not acknowledge or respond to any supposed communications from the IRS if you haven’t first received official notification through U.S. mail. If you get a call from someone claiming to be the IRS, hang up and call the official number on the website before engaging. Further, never click a link that is sent digitally as initial contact.
• Apply good cyber hygiene. Do not use public Wi-Fi when filing your tax returns. Do use strong passwords, secured network connections and multi-factor authentication and ensure you run all software updates and keep systems current.

If you fall victim to a tax scam, report to the IRS. For more tips on how to protect yourself from these and other types of scams, visit PNC’s Security & Privacy Center.