Tax season is a busy time for taxpayers. It is also a busy time for criminals as they ramp up efforts to trick people into sharing sensitive personal information. Identity thieves use this information to try filing false tax returns and stealing refunds, plus scam you financially in other ways.
You may think you are harp on a lot about protecting yourself against identity theft and tax scams. It because having your identity stolen becomes an absolute financial nightmare, sometimes taking years to straighten out. Identity thieves are clever, relentless, and always coming up with new schemes to trick you. And all you have to do is slip up just once to compromise your identity and your nightmare begins.
Awareness
Identity thieves and scammers often imitate the IRS name, logo or web site to convince taxpayers that the scam is a genuine communication from the IRS. Scammers may use other federal agency names, such as the U.S. Department of the Treasury.
In an identity theft scam, a fraudster, often posing as a trusted government, financial or business institution or official, tries to trick a victim into revealing personal and financial information, such as credit card numbers and passwords, bank account numbers and passwords, Social Security numbers and more. Generally, identity thieves use someone’s personal data to steal his or her financial accounts, run up charges on the victim’s existing credit cards, or apply for new loans, credit cards, services, or benefits in the victim’s name and even file fraudulent tax returns.
Scams come in many forms and are usually initiated by a letter, fax, email or with a phone call or text. When scam artists use email to lure its victims, it is referred to as “phishing” scams.
Seniors Are Frequent Targets
Scammers frequently target people over age 65 or nearing retirement for personal or financial information or money. Often, once seniors give them money, they ask for more. When a person is scammed out of tax-deferred retirement funds, the lost funds may be considered a taxable distribution, subject to ordinary income tax and potential early withdrawal penalties if the account owner is under age 59½. While victims might claim a theft loss deduction if the scam was profit-motivated and recovery is unlikely, this process is complex.
Encourage your elderly family members to discuss any suspicious messages or offers with you or another trusted individual before taking any action, as this can help them avoid falling victim to scams. Regular conversations about new scam tactics can empower them to make informed decisions and protect their financial well-being.
How to Spot a Scam
Phishing emails and smishing texts, often share common characteristics that can help in identifying them. Typically, they create a sense of urgency, pressuring potential victims to act swiftly without much deliberation—whether it’s claiming you’re in trouble, that you’ve won an unexpected prize, or that there’s a problem needing immediate attention. Be wary of unsolicited communications, especially those requesting personal information or payment over the phone or through unexpected emails and texts. Scammers may also pose as legitimate companies or government entities, using official-sounding language to gain trust. Additionally, if an offer seems too good to be true, it likely is. Verify suspicious communications by contacting the company or individual through official channels and consult with someone you trust before proceeding with unfamiliar requests. Here are some signs to watch for, such as an email that:
- Requests detailed or an unusual amount of personal and/or financial information, such as name, SSN, bank or credit card account numbers or security-related information, such as your mother’s maiden name, either in the email itself or on another site to which a link in the email sends the recipient.
- Dangles bait to entice the recipient to respond to the email, such as mentioning a tax refund or offering to pay the recipient to participate in an IRS survey.
- Threatens a consequence for not responding to the email, such as additional taxes or blocking access to the recipient’s funds.
- Gets the Internal Revenue Service or other federal agency names wrong.
- Uses incorrect grammar or odd phrasing (many of the email scams originate overseas and are written by non-native English speakers).
- Uses a long address in any link contained in the email message or one that does not start with the actual IRS web site address (www.irs.gov). To see the actual link address or URL, move the mouse over the link included in the text of the email.
- When trying to spot a potential scam, taking a closer look at the sender’s email address can provide valuable clues. Scammers often use email addresses that slightly deviate from real company domains, perhaps with misspellings or extra characters. Additionally, if the domain or extension appears unusual or originates outside the U.S., it should immediately raise red flags.
Common Phishing Emails
Scammers use emails to install malware or direct victims to fake websites that mimic official sites to steal credentials.
- Phony Tax Refunds - Emails stating you qualify for a large refund and must click a link to access it.
- False Legal/Criminal Charges – Messages threatening immediate legal action or arrest for alleged tax fraud, pressuring you to act without thinking.
- Underreported Income Notices – Emails claiming to be a notice of underreported income and containing an attachment or link to a bogus “tax statement”. Opening the attachment or clicking the link can download malware to your computer.
- “Update Your Account” Requests - Emails with suspicious links, such as “IRSgov” (missing the dot), instructing you to update your IRS online account or IP PIN immediately.
- Offers of Third-Party Help - Scammers posing as a “helpful” third party offering to create your IRS Online Account to steal your personal information.
Common Smishing Texts
These text messages often use alarming language or promise financial assistance to trick you into clicking malicious links.
- Account on Hold/Unusual Activity – Texts claiming, “Your account has now been put on hold,” or “Unusual Activity Report,” with a link to “restore” your account.
- Unexpected Refunds/Payments - Messages mentioning an unexpected tax refund or economic impact payment and providing a suspicious link.
- Urgent Action Demands - Texts with an urgent tone, pressuring you to open a link or attachment to avoid penalties or take advantage of a credit.
- Callback Numbers – Messages that include a phone number to call back, which connects you directly to a scammer.
How to Protect Yourself
- Do not click links or open attachments in unsolicited emails or texts claiming to be from the IRS or other tax-related entities.
- The IRS will never demand immediate payment, demand a specific payment method (like gift cards or wire transfers), or threaten arrest or deportation.
- Verify contact directly with the agency using official contact numbers listed on the IRS website or by logging into your secure IRS Online Account if you have previously established one.
- Report suspicious messages by forwarding the email to [email protected] and the text message details (sender number, content, date/time) to the same email address with “Text” in the subject line.
- Obtain an identity protection PIN (IP PIN), which is a unique six-digit number assigned by the IRS to prevent identity thieves from filing fraudulent federal income tax returns using your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
It acts as an authentication tool. If a return is filed without the correct IP PIN, the IRS will reject it, preventing someone else from claiming a refund in your name. An IP PIN is valid for one calendar year. A new PIN is generated every year for security. It is used only for federal tax forms in the 1040 series.
Those who have been victims of tax-related identity theft and have had their issues resolved are automatically enrolled and receive a new IP PIN by mail annually. Any taxpayer with an SSN or ITIN who can verify their identity can voluntarily join the program to add a layer of security at the IRS Get an IP PIN tool.
Social media
Misinformation about taxes is rampant on social media, and misleading advice can have serious repercussions for taxpayers, particularly surrounding credit or refund eligibility. Influencers, who often lack formal tax training, might encourage individuals to falsify information on their tax forms, claiming it will maximize their refunds or credits. Worse, they may propagate unfounded claims that the IRS is concealing certain tax credits from the public. Such misinformation not only jeopardizes tax compliance but can also invite audits and penalties. Additionally, these misleading social media posts often serve as gateways for scammers, who exploit the guise of tax advice to gain trust and ultimately steal sensitive personal information. It’s crucial for taxpayers to seek professional guidance for accurate tax information.
Conclusion
Be aware the IRS will never contact you via email, text messages, or social media to request personal or financial information; instead, they typically reach out by sending official notices through the U.S. Postal Service.
If you have questions or need assistance with any of the issues discussed in this article, please contact our office.
