The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for .
Financial fraud exists throughout the year but becomes far more rampant and aggressive when tax season comes around. Every year, the IRS publishes a list of common tax scams that people should be aware of so they can avoid becoming a victim.
The IRS’ Dirty Dozen tax scams
The IRS’ Dirty Dozen is an annual list of common tax scams that the agency says taxpayers may face at any time but particularly during tax-filing season.
- Phishing: This involves the scammer sending fake emails to the consumer with malicious links intended for stealing personal and financial information.
- Fake charities: Commonly seen during a natural disaster, fake charities trick consumers trying to help during times of need into sending money to unscrupulous entities.
- Impersonation: Often taking many forms, impersonation usually occurs through phone or email, threatening the consumer with dire consequences (driver’s license revocation, arrest, etc.) if they do not make immediate payment to the IRS.
- Social media scams: Because social media allows rampant sharing of information, scammers take advantage of this to impersonate the victim’s friend or family member and send them messages soliciting money or other forms of financial or personal information.
- Refund theft: A type of identity theft, refund scams involve fraudsters filing fake tax returns to the IRS with the intention of diverting refunds to wrong addresses or bank accounts.
- Senior fraud: This involves the theft of personal information from older people through scam emails, phone calls, texts and social media messages.
- Targeting non-English speakers: Impersonators often target non-English speakers or recent immigrants to make threatening phone calls demanding money or financial information and instilling fear of consequences such as deportation, jail time or revocation of driver’s license.
- Fraudulent return preparers: Scam tax return preparers expose taxpayers to fraud and other crimes by not signing the form. They may also trick them into signing a blank return with the promise of inflated refunds.
- Offer in compromise mills: These fake programs make money by charging hefty fees from tax payers who do not qualify for tax debt resolution.
- Fake payments: This is when the criminal scams the IRS and has a fake payment made to the taxpayer’s account, and then demands the money back over threatening phone calls. The repayment often had to be made via gift cards of a certain amount.
- Payroll and HR scams: Also called Business Email Compromise (BEC) or Business Email Spoofing (BES), these schemes involve stealing bank account details or W-2 information and using it to reroute direct deposits or persuade the victim to buy gift cards.
- Ransomware: This is a common scam where the criminal gets the victim to click on a malicious link, which installs malware on the computer and gives the criminal full control of the device. They then demand money (or ‘ransom’) in the form of cryptocurrency.
Other recent IRS scams
Each year, tax scams change and evolve, targeting more people and causing millions of dollars of loss. Some of the recent IRS scams that have been in the news are:
- Social Security number scams: This typically involves scam phone calls threatening to suspend or cancel the victim’s SSN if immediate payment is not made.
- Unemployment benefits scams: Fraudsters filing for unemployment benefits with stolen information is not new but rose significantly during the pandemic in 2020.
- Federal student tax scams: Targeting students and parents, this type of scam usually has impersonators demand payments for the non-existent ‘federal student tax’ and threaten to have the student arrested if the victim does not comply.
- Last-minute email scams: Criminals target tax professionals right before the filing deadline, posing as the taxpayer to request changes to bank account details for the refund.
- Scams targeting educational institutions: A recent scam targeting students, teachers and those with a ‘.edu’ email address, this involves fake IRS emails that ask for personal information claiming to offer a tax refund.
How to report tax scams
It is important for people to know that the IRS will never send email, text messages or social media messages, or solicit personal and financial information. All official communication by the IRS is made via mail, and anything outside of it is fake and should be reported.
There is a dedicated IRS email address (phishing@IRS.gov) where all phishing and other tax scams can be reported. If you have been a victim of BEC or BES scams, you can also email dataloss@IRS.gov to report it.
Financial scams exist throughout the year but escalate before and during tax season. Whether you are a taxpayer or a tax professional, always remember that the IRS never initiates contact over the phone, email or social media, and certainly does not seek personal information or demand money in the form of gift cards. When you begin to recognize the patterns involved in these scams, it is easier to detect and report them, helping bring the criminals to justice.