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Tax ID Theft and the Latest IRS Scams to Look Out For

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Criminals will stop at nothing to try and steal your money, including impersonating government agencies. IRS scams are some of the oldest in the scam artist’s playbook, and they’ve only grown more sophisticated in the digital age.

But because everybody has to deal with the IRS, these types of scams have become well-known and you can easily find information about how to avoid them. Since we’ve previously covered the basics of IRS scams, this article will focus on one type of scam in particular: Tax ID theft. You’ll also learn what some of the latest IRS scams are and, of course, how to avoid them.

Tax ID theft scams

Scam artists like to impersonate IRS and other federal agents, but they’ll also try to steal your identity to file a tax return under your name. They file fraudulent returns early in the tax season and then get the refunds deposited into their accounts.

How common is tax identity theft? 

The Federal Trade Commission Consumer Sentinel Network reported 92,620 cases of employment or tax-related fraud in the first three quarters of 2020. Tax identity theft isn’t the most common type of fraud, and it’s also decreased in recent years thanks to efforts by the IRS, state tax agencies, financial institutions, and tax professionals.

What does the IRS do if you’re a victim of tax ID theft?

If someone has stolen your identity to file a fake tax return, the IRS will flag your legitimate return as a duplicate and possibly reject it. If you find out from another channel that your identity has been stolen (through your bank or credit card company, for example), you should warn the IRS so they can be on the lookout for a fake return with your information on it.

What are some signs you’re a victim of tax ID theft?

  • E-filed return rejected because your SSN has already been used
  • Receiving a W-2 or 1099 from a company you didn’t work for during the tax year
  • Receiving a 1099-G from the state unemployment office, but you didn’t collect unemployment during the tax year
  • Receiving a letter from the IRS asking you to verify your tax return (The IRS will always do this by letter. They won’t call, email, or text you for this information.)

Hackers are nothing if not innovative. They’ll always come up with new ways to pull a fast one on an unsuspecting taxpayer. Although some IRS scams may be well-known, new ones regularly pop up.

Some of the latest scams to be aware of, according to NerdWallet, are:

  • FDIC scam: Some scammers are pretending to be from the Federal Deposit Insurance Corporation (FDIC) instead of the IRS and asking people for their bank information. The FDIC’s job is to insure bank deposits and they never send unsolicited correspondence asking for any personal information or banking information.
  • Canceling your SSN: Some IRS scams involve telling an individual that their SSN is being canceled or suspended for some reason. The IRS never threatens taxpayers over unpaid tax bills so if you receive a phone call about canceling your SSN, it’s a scam.
  • Bureau of Tax Enforcement: Some victims receive letters notifying them of a tax lien or tax levy from the Bureau of Tax Enforcement. The Bureau of Tax Enforcement does not exist.
  • Form W-8BEN scam: Scammers have been sending fake versions of a real IRS form, the W-8BEN. It’s a “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding.” The scam artists ask for info such as mother’s maiden names and passport numbers.
  • Federal Student Tax scam: There is no such thing as a Federal Student Tax in the U.S. If anyone asks you for it, they’re a scam artist.
  • Tax preparer scam: Rather than posing as an IRS agent, some scam artists will pretend to be tax preparers. If you pay someone to prepare and file your taxes for you, they must have a valid Preparer Tax Identification Number (PTIN) and they must sign your tax return. If they don’t want to sign it, they are probably a fake.
  • IRS or FBI survey: If you receive a message with a link claiming to be an IRS or FBI survey, do not click the link. It downloads ransomware on your computer.
  • Stimulus check scams: Fraudsters and scammers are trying to coax people out of their COVID-19 relief stimulus money and taking advantage of people who are excited or impatient to get their checks/deposits. Know how to identify a fraudulent stimulus check and don’t speak to strangers or outsiders about your payment. Read our tips for how to spot stimulus check scams.

There are ways to tell if someone really is from the IRS or just a scam artist. For starters, the IRS never initiates contact with taxpayers by any means other than letters sent by mail. If the real IRS wants to contact you for some reason, they will not email, text, or call you, nor will they contact you via social media or leave you an unsolicited voicemail.

Another red flag is if the form the “IRS” has sent you doesn’t appear on the IRS website. If you’ve received a form in the mail that you’ve never heard of before, look it up on the IRS website.

IRS agents also have two forms of identification — a pocket commission and an HSPD-12 card. You can ask to see both and verify info on the HSPD-12 card by calling the IRS.

The IRS will also never ask you to pay in gift cards, for a credit or debit card number over the phone, nor will they contact you out of the blue demanding money. The IRS also never threatens to arrest, deport, revoke driver’s licenses, or any other similar action against taxpayers who owe money. In fact, the IRS has certain rules to follow when dealing with taxpayers, called the Taxpayer Bill of Rights.

Avoiding IRS scams

It’s important to stay aware of the latest IRS scams so you can protect yourself if a fraudster ever targets you. Know what their typical tricks are, but also use reason and sound judgment. If something seems suspicious, don’t respond to it and check with the real IRS.

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