IRS Tax Scams

Read about some common IRS tax scams whereby dishonest crooks pretend to be from the IRS to scam innocent people. Also learn how to avoid being a victim.

IRS Tax scams on the rise

The Internal Revenue Service, IRS, is the revenue service for the United States federal government responsible for collecting U.S. federal taxes and administering tax law. Nowadays, IRS tax scams are on the rise. The IRS shares that, “Thousands of people have lost millions of dollars and their personal information to tax scams. Scammers use the regular mail, telephone, and email to set up individuals, businesses, payroll and tax professionals.” Be on the lookout for these types of scams:

• IRS impersonation scams: In this common scam, scammers target taxpayers via the telephone and act as aggressive IRS agents. They often go after individual taxpayers, frequently targeting recent immigrants. They may offer fake or real names and ID badge numbers. In some cases, the phone number from which they call looks like it’s from the IRS. The telephone spoofing is done to make the telephone call appear to be from the IRS when it’s a scammer calling. Victims are told that they owe money to the IRS. They may be threatened with arrest or deportation for non-payment. These scammers are persistent and threatening. Victims are often told to pay in gift cards or wire money. Takeaway: The IRS will not call you out of the blue to say you owe money. They will not threaten you with harm nor behave unprofessionally. And they will never ask you to pay in gift cards or wire money to them. Scams of this nature should immediately be reported to the IRS.
• Unclaimed refund scams: This newer scam is done by mail and tricks people into believing that they are owed a refund. Here’s how it goes: mail arrives in a carboard envelope from a delivery service. Per the IRS, the enclosed letter includes the Internal Revenue Service masthead with contact information and a phone number that does not belong to the IRS. Often, the following wording is present, “…in relation to your unclaimed refund.” Takeaway: Should you receive seemingly “convincing mail” of this nature, be cautious. Do not automatically assume that it is legitimate. If you’re expecting a refund, one may use the Where’s My Refund? tracking app available on IRS.gov. There, taxpayers can check the status of their returns within 24 hours after the IRS acknowledges receipt of an electronically filed return or four weeks after the taxpayer mails a paper return. One may also independently reach out to the IRS (using a legitimate phone number for the IRS – not one provided to you in the letter) or ask a tax professional if the notice is legitimate.
• Unemployment benefits scams: The IRS cautions taxpayers to watch out for this scam whereby criminals seek to steal identities to file fraudulent claims for unemployment compensation. They explain that unemployment benefits are taxable income. Therefore, states issue Forms 1099-G, Certain Government Payments, to recipients and the IRS. This shows the amount of taxable compensation received and withholding. The IRS tells taxpayers who received a Form 1099-G for unemployment compensation that they did not receive to promptly report the fraud to state workforce agencies. Takeaway: Victims of this fraud, and others seeking protection, should opt into the IRS Identity Protection PIN program, providing a six-digit number that helps prevent thieves from filing federal tax returns in the names of identity theft victims.

Stopping scammers

The three situations described above serve as examples of common IRS tax scams out there today. The IRS works hard to protect taxpayers from scams by continually providing consumer information and alerts via the official IRS website. In addition to educating the public, the IRS continually strives to protect taxpayer information. Should you receive a call, text, email, or mail – pay attention to red flags that indicate it’s not the IRS. If you are unsure, take separate steps to authenticate the validity of notices. Where legitimacy is uncertain, reach out to your professional tax preparer or contact the IRS directly using their authentic phone number that you looked up. Worth repeating, avoid engaging with scammers and promptly report unscrupulous activity to immediately stop the spread of scams. Disclosure: This article is purely informational and is not intended as a specialized tax resource or substitute for professional advice. Interested in learning how to avoid a tax audit? Click here to learn three ways to do so.