Here’s a sampling of the scams that criminals spring at potential victims during income tax season, according to the IRS.
• Scammers trying to trick you into paying for a government stimulus check.
• Criminals demanding that you pay IRS penalties by sending them gift cards.
As Tax Day gets closer, it’s smart to be on the lookout for these and other IRS-related scams.
Tax scams prey on stress and fear. Here’s help
Criminals know that filing taxes can be complicated and that stressed consumers may be more likely to fall for phishing scams in which scammers trick them into giving up their personal and financial information.
They know, too, that many taxpayers are so frightened of the IRS that they'll do just about anything, including sending them money or gift cards, to pay for the taxes they think they owe.
It all adds up to the perfect environment for scammers who want to steal your Social Security number or snatch your income-tax refund.
Fortunately, you can help protect against these crimes by knowing the signs of an IRS scam and taking the steps to avoid them
Here, then, is a look at five of the more common tax-related scams you might encounter during income-tax season.
1. Tax-related identity theft
Waiting for a big tax refund this year? Watch out for thieves who want to steal it.
Tax-related identity theft happens when scammers steal your personal information — including your Social Security number, address, birthdate, and other information — and use it to file an income tax return in your name. Thieves do this so that they can steal your tax return.
How do you know when you’ve been the victim of tax-related identity theft? There are several clues to look out for:
· You try to file your return online only to have the IRS reject it, saying that a tax return connected to your Social Security number has already been filed.
· You file your taxes by mail. The IRS then sends you a letter stating that a tax return has already been filed with your Social Security number.
· The IRS notifies you that an online account has been created in your name at IRS.gov and you know that you never signed up for such an account.
· The IRS sends you a transcript by mail that you never requested.
What to do next: If you have been the victim of tax-related identity theft, here’s what to do next:
Complete IRS Form 14039, Identity Theft Affidavit. This form allows you to report your suspicions to the IRS. Fill out the form at IRS.gov, print it out and attach it to your paper tax return. Mail the form and your return to the IRS, following the instructions on the form.
You can also request a copy of your fraudulent tax return from the IRS. For more information about this, visit the IRS’ page on dealing with fraudulent returns.
You should also report this identity theft to the Federal Trade Commission and contact the three national credit bureaus of Experian, Equifax and TransUnion to place a fraud alert on your credit reports.
How to protect yourself from tax-related identity theft: The best way to avoid this type of fraud is to safeguard your Social Security number and other personal information. Never give personal or financial information to strangers who send you emails requesting this information. Don’t give up this information during phone calls. And be sure to check your bank account and credit card statements regularly for suspicious activity that could be a sign someone has stolen your personal information.
Be sure, too, to take advantage of the IRS’ newest identity protection tool, the Identity Protection Personal Identification Number, better known as an IP PIN. You can apply for this six-digit number directly from the IRS as a way to make life harder for identity thieves. These thieves would need to know not just your name, address and Social Security number to steal your identity, but also your unique IP PIN.
To register, you'll need to provide your email address, Social Security Number or Individual Tax Identification Number, tax filing status, mailing address and one financial account number linked to your name.
2. The gift card scam
The gift card scam is another all-too-common tax scam. According to the IRS, scammers call you or leave a voicemail with a callback number claiming that you owe federal taxes and are in danger of being charged with criminal activity.
If you pick up the phone or call the scammer back, this criminal will demand that you pay a penalty fee and that you pay it by sending gift cards from various stores. Once you buy the cards and call the scammer back, the criminal will ask for the card's number and PIN.
You know what happens next: The scammer will use that information to buy items from the stores, and you'll be out the money you spent on the cards.
How to avoid this scam: The IRS will never call you about taxes that you owe or penalties you must pay. Instead, the agency will contact you through mail. If anyone from the IRS calls about missing tax payments, hang up. It's a scammer.
The IRS will also never request gift cards for penalties or tax payments. If someone requests them, hang up. This is the sure sign of a scammer.
3. The refund recalculation scam
We all want the maximum refund when we file our income taxes. Criminals know this and aren’t afraid to take advantage.
In the refund recalculation scam, criminals will contact you, either by email or text, to say that they recalculated your IRS refund and that you are due more money than originally thought.
That sounds like good news. Unfortunately, it’s a scam.
The emails, which might include the official IRS logo, will ask you to click on a link. When you do, you’ll be taken to a web page that asks for such information as your Social Security number, birthdate, driver’s license number, and other information. If you provide this information, the scammers will use it to access your online bank and credit card accounts or apply for credit cards and loans in your name.
How to avoid this scam: Again, the easiest way to avoid this scam is to understand how the IRS works. If the IRS did make a refund mistake, it would contact you through regular mail first, not through email. The IRS will also never ask for your personal or financial information through email. Spot any of these telltale signs? Delete that email. And never click on any links in it. If you are concerned that you might actually have a larger refund coming, contact the IRS directly through its customer service numbers to check.
4. Stimulus payment scam
The COVID-19 pandemic has brought out the scammers. And these crooks have been especially active in trying to steal victims’ personal and financial information in the hopes of sending them an additional stimulus payment.
The federal government did send out stimulus payments to taxpayers during the pandemic. But there are no new stimulus payments going out as of late 2021 and early 2022. If you receive an email supposedly from the IRS stating that you are due a stimulus payment, it’s a scam.
The email might ask you to click on a link to receive your payment. When you do, you’re taken to a page requesting personal and financial information, everything from your Social Security number to your birthdate and driver’s license number. Don’t provide this information. If you do, you’ll be sending it scammers who can use it to steal your identity.
How to avoid this scam: First, remember that the IRS will never initially contact you through email. They’ll only reach out to you through regular mail. Secondly, you never have to pay a fee to receive a stimulus check from the government. If someone asks you to pay money to receive money — in any instance — it’s always a scam. Delete the email without replying or clicking on any links it contains.
5. The Taxpayer Advocate scam
The IRS' Taxpayer Advocate Service helps taxpayers tackle tricky tax problems. The service, though, is also at the center of a popular tax-related scam.
In this scam, con artists call taxpayers using a number that looks like it's coming from the IRS Taxpayer Advocate Service office in Houston or Brooklyn. Sometimes these calls are made by a human. Other times they are robocalls that ask taxpayers to return a call.
When taxpayers pick up the phone or call back, a scammer requests their personal information, including the victim's Social Security number or taxpayer identification number. Once scammers have this information, they can use it to steal their victims' identities.
How to protect yourself: The best way to protect yourself? Be wary whenever anyone says they are calling you from the IRS, even if this person is supposedly calling from the Taxpayer Advocate Service. The IRS says that agents from the service don't contact taxpayers randomly. Taxpayers reach out to the service first. Only then do agents from the service contact them.
Your taxes could be getting filed in your name by someone else.
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If someone calls you from the IRS? The odds are high it's a scammer. The IRS reaches out to taxpayers through regular mail, not phone calls, texts, or email messages. And IRS agents will never call you and ask for your Social Security number or other personal information.
If you get such a call? Hang up. You can then call the IRS back to see if there really are any problems with your tax returns.