Scammers are everywhere. They do whatever they can to stay ahead of the game and not get caught. They may seem innocent at first, playing on your emotions to get you to talk before they sucker you in to giving up you personal information and money. Some pretend to be long lost relatives, while others call about defects to your internet connection or computer's operating software. Some of the most popular scams involve people pretending to be from the tax man, threatening harm if you don't comply with their requests.
Authorities say thousands of people—ordinary citizens to professionals—fall prey to these scams each year, losing millions of dollars in the process. According to a Federal Trade Commission (FTC) report, nearly one in five people were victims of imposter scams in 2018—most of those, young people—with roughly $488 million lost.
How do IRS scammers go about stealing your personal information? They can find it in many different places. We've listed the most common tactics scammers use to get your information below, along with some tips on what to do if you think you've been targeted.
- Thousands of people fall prey to IRS scams each year, losing millions of dollars in the process.
- Scammers scare people into providing sensitive information or money by phone, email or snail mail, threatening arrest or deportation if they don't comply.
- Phone scammers spoof caller ID information, use IRS employee badge numbers, and have key information about their targets.
- Emails appear legitimate and may contain links operated by scammers who want to steal your information.
- Report suspicious correspondence to the IRS directly.
All of our personal information is stored on our unencrypted hard drives and USB drives, the cloud, by our employers, our financial service providers, our tax preparers, and even the Internal Revenue Service (IRS) itself. Because income tax returns contain valuable personal information like your Social Security number (SSN), marital status, and how much money we make, they are a highly desirable target for hacking by identity thieves.
Scammers take advantage of people’s deep fear of the IRS to scare them into providing sensitive information or money by phone, email, or snail mail. In extreme cases, they may be able to infect computers with malicious software. Called malware, it lets them access people's files or track their keystrokes via links and attachments in emails, or by impersonating tax preparers or tax preparation companies.
While you can’t possibly prevent all types of tax-related fraud that may affect you, you can educate yourself about how these tax scams operate to make sure you don’t become the victim of a crime you have the power to prevent.
Scammers who get in touch with you always find ways to trick you. The IRS has a list of what it calls the Dirty Dozen—some of the most common scams circulating or that the agency has already documented.
In an attempt to get you to listen to them and pay, scammers may claim:
- You haven't paid a nonexistent federal student tax
- Penalties related to the Affordable Care Act
- Back taxes
- An investigation is going on against you without even providing any background information
Others get a little more creative by claiming they are from charitable organizations seeking donations from kind-hearted individuals like you, or are tax professionals who can get you a bigger return. Remember: None of this is true.
Scammers carry out the majority of their schemes by phone. They try to convince callers they are legitimate IRS employees by spoofing caller ID information, using fake or even real IRS employee badge numbers, and having key information about their targets. The IRS calls these scammers aggressive and sophisticated.
Callers try to convince their targets to send them immediate payment through a preloaded debit card, gift card, or wire transfer—which can be hard to track. Once you discover you've been scammed, recovering your money is virtually impossible. Scammers may also ask targets to hold up their credit cards to the camera in their phones or computers via Skype, in an attempt to get their payment information.
Many scammers ask for payment through a preloaded debit card, gift card, or wire transfer which can be hard to track.
If the target doesn’t pay up, callers may threaten arrest, suspension of their driver’s or business license, or—in the case of immigrant targets—deportation. These scammers are successful enough that they’ve gotten victims to pay millions of dollars over the last few years.
Email scams are another major threat. You receive an email that appears to be legitimate because the scammer appropriates the IRS logo or a legitimate tax software company’s logo. The email may be about your refund, filing status, personal information, or e-File PIN.
Links in the email direct you to websites that look legitimate but are actually operated by scammers who want to steal your information so they can claim fraudulent tax refunds in your name. These sites may also contain malware that give criminals access to your files or track your keystrokes without your knowledge.
Signs You May Be a Victim
Aside from realizing after the fact that you gave your credit card number or submitted a wire transfer to someone posing as an IRS agent, the following signs—explained by tax preparer Abby Eisenkraft in a tax fraud seminar for CPAacademy.org, a knowledge-sharing site for accounting professionals—could indicate that you’ve been the victim of tax-related identity theft.
- Your tax return is rejected when you file it. This could happen if someone has already filed a fake return using your SSN in order to claim a fraudulent refund.
- You receive a letter from the IRS that asks whether you sent in a tax return containing your name and Social Security number. This letter could indicate that someone else has attempted to file using your information.
- You receive a W-2 or 1099 from an employer for whom you have not worked. Google the company’s name to make sure that the name you know the company by is different from its official name, which is what appears on tax documents.
- You receive a tax refund for which you did not file. The IRS is not a gift horse.
- You receive a tax transcript by mail that you did not request. A tax transcript is a document showing most of the line items from your originally filed tax return but not any changes you may have made after you filed the return.
What to Do
If you receive any communication that appears to be from the IRS, don’t panic. It's always important to be vigilant and report any calls or correspondence you receive. The IRS and other agencies rely on you to bring these scams to their attention before anyone gets swindled. If you make a report today, you may be helping someone later on. Depending on what type of communication you receive, here's what you should do:
If the contact is via email, it’s fraudulent. Do not respond to the email, click on any links in it, or download any attachments to it. Forward the message to firstname.lastname@example.org, then delete the original email.
The IRS will never make first contact with you by phone regarding your tax situation. The agency will always contact you through postal mail before anything else. Even if you've already had legitimate contact with the IRS, do not assume a phone call is the real deal, even if your caller ID has a Washington, D.C., area code or one that says Internal Revenue Service.
Don't provide the caller with any information. Say you cannot talk at the moment and will call back shortly. Do not ask for a phone number. But make sure you ask for a name and badge number. Then call the IRS directly using the phone number provided on IRS.gov: (800) 366-4484. You will be able to find out if the call was legitimate.
If a scammer calls you using a legitimate employee’s name and badge number, the IRS will be able to tell you. And if the caller is obviously a scammer, hang up and immediately report the call to the Treasury Inspector General for Tax Administration and email email@example.com using the subject “IRS Phone Scam.”
It is important to understand the IRS never threatens arrest or sends the local police to arrest you. There are cases where people are arrested: Those who intentionally commit tax fraud and evasion by purposefully lying to the IRS, anyone who underpays the tax they owe, or who fail to file a tax return. So remember—ordinary citizens who have simply made a mistake on their tax returns are never at risk of going to jail over unpaid taxes.
If the contact is via text message, it’s a scam. As with an email, you should not reply, open any attachments or click on any links in the message. Instead, forward the text to the IRS at (202) 552-1226. If possible, send the IRS a second message with the number from which the fraudulent text originated, then delete the fake IRS text message.
If the contact is via postal mail, it may or may not be legitimate. Scammers have sent fake IRS notices by mail. These notices can be challenging to authenticate, but here are a few clues:
The IRS uses form CP2000 to inform taxpayers of proposed IRS adjustments to their returns. Scammers send out fake CP2000 forms that have an illegitimate IRS address, ask the taxpayer to make the check out to the IRS rather than the United States Treasury—which is how you make out a check to the genuine IRS—and instruct the taxpayer to send payment immediately and dispute it later, even if he or she disagrees with the amount of the notice. The real IRS allows taxpayers to dispute claims of unpaid taxes first and pay after an agreement is reached.
Rather than immediately assuming that an IRS letter requesting payment or personal information is real, go to IRS.gov and search for the relevant notice or form number and read the IRS’s page Understanding Your IRS Notice or Letter. You can also call the IRS directly at (800) 829-1040 to inquire about a letter’s legitimacy.
The Bottom Line
Anyone can become a victim of an IRS-related scam because there are so many ways for criminals to steal your personal information without your knowledge. That said, your odds will go down if you’re aware of the scams that criminals can carry out only if you cooperate, such as phone scams that ask for personal information or email scams that download information-stealing malware onto your computer.
As new scams continue to come out all the time, listen to your gut if anything seems remotely suspicious. Don’t engage with anyone who reaches out to you about your taxes and always contact the IRS directly by using the information at the official IRS website, IRS.gov, if you have any concerns.