How to Recognize and Prevent IRS Tax Scams

When you receive a phone call or text message from someone purporting to be an agent of the IRS and demanding payment, it can cause panic and fear. Even if you instinctively feel as though you’re the victim of a tax scam, you may reactively follow the instructions of an authoritative-sounding “IRS agent.”

The good news is that the IRS (Internal Revenue Service) will never call or text you to demand payment. However, IRS scams by mail or received through email may be harder to distinguish from legitimate correspondence. As technology grows more sophisticated, cybercriminals use increasingly subtle methods to launch IRS phishing scams to steal your personal information and your money. 

In order to avoid falling victim to this type of fraud, It’s important to be able to recognize the warning signs of a tax scam, how to discern real IRS correspondence, and how to prevent a tax scam from impacting your life.

What you need to know about IRS tax scams 

Every tax season, unsuspecting Americans fall prey to IRS tax scams. The IRS and the FTC (Federal Trade Commission) issue warnings each year to help protect citizens from losing money or facing the impact of stolen personal information.

If you’ve become a victim of tax scams in the past, you’re not alone. In 2022, the IRS reported over 2500 investigations into fraud and cybercrimes targeting taxpayers. Thankfully, these investigations resulted in a 90% conviction rate. 

Here are some other staggering statistics on tax scams that you should know:

• In 2021, the IRS received reports of 328,591 victims who reported tax scams that resulted in identity theft. 
• In 2023, over 1 million tax returns were flagged for identity fraud.
• There was a significant increase in the number of fraudulent tax returns from 2022- 2023. 
• Every year, over 2.4 million people are targeted by an IRS tax scam.
• In 2023, scammers cost their victims over $2.7 billion.

What is a tax scam?

Although a tax scam can take many forms, many IRS imposters use phishing attacks to target their victims. One of the oldest cyberattacks that still exist in some form today, a phishing attack typically involves an email or message that “reels in” its victims. 

Cybercriminals lure you to click on a malicious link and share your personal information like secure passwords and account information. Phishing attacks may attempt to steal your identity, money, or confidential business information. Tax scams that use targeted phishing attacks may include a fake IRS letter or urgent pleas to resolve “unpaid taxes” that demand you act immediately.

The ‘Dirty Dozen’ tax scams

The IRS often releases a list of the newest tax scams to watch out for and avoid. Given the cool if ominous-sounding moniker, the “Dirty Dozen,” this list is a great way to ensure you understand the latest scams targeting taxpayers and thus, know how to remain on high alert. 

The most recent Dirty Dozen tax scam list includes:

• Spearfishing: A type of phishing attack that specifically targets businesses or individuals via email.
• Bogus tax avoidance strategies: Emails or targeted ads that claim to help taxpayers avoid certain taxes. Bogus tax avoidance strategies will ask for immediate payment and your tax information.
• High income tax scams: There are specific tax scams targeting high income earners that have recently become extremely prolific. These IRS scams might involve a bogus art promoter soliciting direct donations and claiming they result in large tax deductions, a charitable remainder trust (CRAT) that promises false gains, or solicitations for shady monetized installment sales.   
• “New Client” scams: These scams use spearfishing emails to pose as “new clients” for tax preparers. The emails include malicious “tax information” attachments or URL links. 
• Social media misinformation: Social media posts or ads that promise increased tax refunds and direct users to file inaccurate or fraudulent tax information.

(You can directly link to the complete Dirty Dozen list here.)

Methods used for tax scams

The most insidious characteristic of a tax scammer is the fact that they may find multiple ways to target their victims. These con artists might call you, text you, lure you in via social media ads, send you a fake IRS letter, or email you. 

Examples of methods used for Internal Revenue Service frauds include:

• Robocalls: Robocalls may claim to be from the IRS and make an urgent demand for money. These calls may also threaten you with horrible consequences if you don’t pay immediately, including arrest.
• Smishing: Smishing is a form of a phishing attack via a scam text message. Using the smishing method, tax scammers will claim to be from the IRS, send you an urgent plea for money, and include a malicious link for you to follow. Both robocalls and smishing attacks may spoof the general toll-free IRS phone number. However, the IRS will never demand immediate payment from you via a robocall or a text message.
• IRS scams by mail: A tax scam may include a snail mailed letter seemingly from the IRS. As a fake IRS letter may include the IRS logo and a bogus U.S. government seal, it’s important to look for the following: a tax payer authentication number that matches the one you have on file. You can also directly visit the IRS website to confirm there’s a copy of the letter in your file.

How the IRS contacts you

The IRS will never ask you to reveal personal information through a phone call or text message. However, the agency will reach out to you via a mailed letter if there’s an error in your payment or tax refund.

Any formal communication from the IRS will include accurate contact information, including a government mailing address, website, email address, and phone number. A mailed IRS letter will include your tax payer ID number, and will not include a link to a third-party, unknown website. 

3 steps to protect yourself from a tax scam

It’s important to remain alert to the possibility of a tax scam all year and especially throughout tax season. Check the IRS and FTC websites for tips and new trends in IRS tax scams so that you can protect yourself. 

Here are three steps you can take to prevent Internal Revenue Service frauds from negatively impacting your life.

Don’t reply to IRS emails or texts

It can be tempting to send a snarky reply when you receive an obviously fraudulent text or email. However, If you receive an email or a text from someone claiming to be with the IRS, even responding could jeopardize your sensitive information. Ensure you never click on links included in these messages, too. 

You can forward texts to the IRS via (202) 552-1226, and if you accidentally click on a link included in a text, you should visit the IRS Identity Protection page. Block the phone number or the sender’s email address, and you can also forward any suspicious emails to the IRS via [email protected].

Report suspicious websites and social media ads

If you come across a website or a social media ad that claims to be associated with the IRS but isn’t an official government website, don’t click on it! Send an email to [email protected] with the subject line “Suspicious website” and include the associated URL. The official IRS website is www.irs.gov — any .org or .com claiming to be an official IRS link is a tax scam.

Invest in identity theft protection software

If a hacker gets ahold of your personal information and uses it to file a fraudulent tax return and steal your identity, it may take months or even years to stop the adverse effects. 

Identity theft protection software such as Aura or LifeLock by Norton can help prevent a tax scam as well. These programs monitor your bank accounts and credit information, alert you to any suspicious activity, and add extra layers of cybersecurity to your online information to protect you from identity theft. 

If you think you’ve been targeted by a tax scam, you can also file a report with the Treasury Inspector General for Tax Administration (TIGTA), the FTC, and your local police department. By learning how to identify and prevent IRS tax scams, you can protect yourself and help to stop tax scammers in their tracks
Visit the What Is My IP Address homepage for free tools to protect your cybersecurity, and check out the Easy Prey podcast for more helpful tips.