Tax season is ramping up and scammers are on the hunt for millions of Americans' hard-earned refunds. Knowing the warning signs can prevent taxpayers from falling victim to tax schemes.
Each year, the IRS releases its annual list of the top 12 scams and schemes that put taxpayers and the tax professional community at risk of losing money and personal data. Phishing scams continue to infiltrate the tax community.
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“We're seeing a huge 77% increase in IRS-related phishing attempts via text messages," said Karin Zilberstein, the vice president of product at Guard.io.
These messages often look like official correspondence from the IRS in an attempt to trick taxpayers into providing personal information or stealing their money.
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“Some would be more marketing, maybe enticing the consumer who received (the message) to check a tax loophole,” said Zilberstein. “Some would be claiming that the consumer who received it is eligible for an economic impact payment.”
The most common types of schemes the IRS saw in 2024 include bogus tax avoidance strategies, fake charities exploiting taxpayer generosity, false fuel credit claims, fraudulent offshore schemes and spearphishing attacks.
“We've had clients that have been scammed where they'll have a vendor or a state agency email, they'll have a virus on their computer. As soon as they're getting close to that payment, the hacker will take over,” said Christopher Nash, managing partner at Nash CPA, “They will create fake email addresses with the proper IRS logo or state signature on there, send you an email saying, ‘hey, you have to wire me the money for the payment of your taxes.’”
Tax experts recommend setting up an Identity Protection PIN, or IP PIN, with the IRS to stop thieves from filing fraudulent tax returns.
“If you have that number, that gets mailed to you, nobody can file a return on your behalf unless that pin is used,” Nash said. “That's something that if someone has their identity compromised, whether their credit card has been hacked, or their bank account has been compromised.”
The IRS also warns against "ghost preparers." These are unscrupulous tax preparers who could encourage people to file false tax returns and steal valuable personal information. Avoid preparers who base fees on a percentage of the refund. Before sending anything to the IRS, ensure the preparer signs the return and includes their preparer tax identification number on any document.
“When it comes to sensitive financial information or sensitive personal information, especially this season, it's better to use technology on your side. With generative AI becoming so prevalent, it's just more likely that people will fall into scams.”
The IRS will typically reach out to taxpayers by correspondence first, rather than by phone or email.
Taxpayers can verify any letter or notice by visiting IRS.gov.
