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Tax refund scams are becoming increasingly common—the IRS flagged nearly 2.4 million tax returns with refunds totaling roughly $13.8 billion using its identity theft filters. The IRS maintains a running list (called the Dirty Dozen) of the most common tax scams.
Protecting your personal information is critical to steering clear of tax refund scams, as is knowing how fraudsters scam you. In this guide, we discuss 15 tax refund scams you should be aware of.
If you believe you’ve been a victim of any steps, take corrective action immediately. Corrective action might include reporting to the IRS and the police, depending on the gravity of the situation.
Tax refund scams are designed to steal a taxpayer’s personal information. The idea is to redirect your tax refund to their own account and steal your money.
The government offers a tax refund check if you paid more taxes last year than you owe. But right around tax season, scammers swoop in to file a counterfeit tax return.
The scammer states their own address when filing the return instead of yours to receive the tax refund check from the IRS, and they’re gone once they have your refund money.
This is one of the many ways a criminal might steal from you. Criminals might also directly contact you and demand that you pay your “overdue” tax bill or face consequences.
From pretend IRS agents to tech-savvy criminals, you must protect your tax refund from multiple threats. Let’s talk about tax refund scams that plague our country so you can stay vigilant and protect your money.
The IRS will never initiate contact via email. They also won’t send you emails to notify you about a tax refund or share sensitive information via email. In 2019, the IRS reported that phishing emails may send victims to a website that looks like the official IRS site.
However, these are phishing pages designed to steal your information in the name of verification or infect your device through a malware-laden file.
You’ve probably experienced spammy calls from credit card companies and marketing agencies. During tax season, some of these spam calls may come from fake IRS agents demanding tax payments.
Remember, the IRS doesn’t demand tax payments over a call or threaten to bring in police if you don’t pay.
Keep fraudsters away: Use Cloaked to mask your phone number and email. Use a masked phone number or email when signing up for online accounts so fraudsters never get access to your primary contact details.
Scammers may ask you to fill out and email additional tax forms to obtain personal information like your Social Security Number. Never respond to emails requesting additional information—the IRS never asks for information via email. If you have questions, contact the IRS using the phone number on the official website.
Unethical tax professionals may promise to 2x or 3x your tax refund and charge you fees proportional to your refund. The problem? These “ghost” tax return preparers don’t sign the tax returns, claim bogus deductions, and use other questionable practices to get you a higher tax refund.
This can lead to an audit and other legal problems.
Picture this: you’re trying to file your tax return. When you hit submit, you see a message that says the return has already been filed. If this happens to you, an identity thief might be to blame. Someone with your personal information and Social Security Number may have filed your return and stolen your refund.
To remedy this, alert the IRS using IRS Form 14039 and complete identity verification when the IRS requests it using Letter 5071C.
A scammer might email taxpayers with a link offering unemployment benefits or stimulus checks. When you open the link, you see a login page similar to the official IRS website.
However, if you look at the domain name, you’ll notice that the page isn’t hosted on the official IRS domain. When you add your information to this page, it’s relayed to the scammer who uses it to steal your identity, and then your tax refund.
A scammer might threaten you over a call or email to get you to share your Social Security Number. They might claim your Social Security Number has been suspended, canceled, revoked, or frozen–none of this is possible.
If you receive such a call or email, hang up or discard the email immediately. Moving forward, be mindful about where you share personal information, especially details like a phone number or Social Security Number.
A fraudster may send a message saying “We’ve detected unusual activity on your account” or “Your tax refund is on hold” to force you to take action. When you use the (phishing) link in the message to log into your account and check the unusual activity, the page sends your login information to the fraudster.
The IRS uses traditional methods of communication and never messages taxpayers about tax refunds or unusual account activity.
Mask your email: Generate a masked email using Cloaked and redirect those emails to your primary email. This gives you the option to cut off emails from unwanted senders at any time and protects your primary email from hackers.
The IRS helps people struggling to pay tax debt through a program called Offer in Compromise (OIC), provided they meet the eligibility requirements. A fraudster may promise to get you into the program even if you’re ineligible if you pay them a fee and steal information in the process.
If you’re in a similar situation, use the OIC pre-qualification tool, and don’t trust anyone else outside of the IRS.
A cybercriminal may email or call you claiming to be from a government agency and threaten you with a tax lien. It’s easy to recognize this is a scam if you’ve already paid your taxes. If you haven’t paid your taxes, contact the IRS with any questions instead of responding to a call or email about the tax lien.
Scammers may pose as IRS agents and threaten you to pay taxes or penalties immediately or face legal action. If you notice a phone number that doesn’t belong to the IRS, or the caller requests that you pay via PayPal or Zelle, you’re likely dealing with a scammer. If you’re worried about any outstanding tax debt, call the IRS at its official number.
The IRS doesn’t accept payments via gift cards. However, if you receive a call, text, or email (often around the holiday season) asking you to pay a tax bill with gift cards, you know you’re dealing with a tax refund or holiday scam.
The IRS requires non-US workers to fill out W-8BEN if they have received an amount subject to withholding from a withholding agent or payer. Scammers may try to get you to fill out a fraudulent version of W-8BEN that includes additional fields for bank details, passport number, and other details that can help the fraudster.
For your reference, here’s what a W-8BEN looks like:
Scammers may coerce you into making a payment claiming you have outstanding tax debt. They may threaten you with arrest and imprisonment if you don’t immediately pay tax. The IRS never threatens taxpayers and doesn’t call taxpayers regarding outstanding tax debt.
Make sure you don’t fall into the trap and report the phone number or email.
Scammers may pose as government agencies and reach out to taxpayers after a natural disaster, seeking financial aid for affected individuals. They may even claim that the financial aid is tax deductible and request that you make a quick donation using a cash app.
Their aim? To get you to pay or get your personal information.
Protection against tax refund isn’t complex. All you need to do are follow best practices and use a privacy solution like Cloaked. With Cloaked, you can generate unique identities. Each identity comes with a new phone number, email, and more.
Whenever you sign up for an online account, use your secondary phone number and email so even if the platform sells your information or there’s a data breach, your primary contact details—the ones you use for banking and other important activities—remain safe.
That’s not all. Cloaked offers various other features to ensure privacy:
If you’re looking for a complete online privacy solution and protection against scammers, join Cloaked today!
You can sniff a tax refund scam from a mile away if you know what to look for. Let’s discuss some common tax refund scam red flags.
Government agencies and tax experts use professional language. If you notice unprofessional language or phrases aimed at threatening you or creating a sense of urgency, such as “final notice” or “urgent action required,” take a step back and analyze the situation.
Try to verify the authenticity of the communication by calling your tax professional at their primary contact number.
Government agencies like the IRS only accept payments via traditional channels like electronic bank transfers, checks, and credit or debit cards via a payment portal on the official website. Be wary of payment requests for a supposed tax debt via unusual channels like cryptocurrencies.
Criminals may try to elicit personal information as part of a tax refund scam. They may request details like Social Security Numbers, bank account details, and passwords under the guise of identity verification and tax refund processing.
Sharing this information without verifying its legitimacy is a recipe for identity theft and financial fraud.
Fraudsters may lure you into sharing personal information or making payments by promising unrealistically large tax refunds or enticing rewards. If someone guarantees a tax refund or offers rewards in exchange for participation in a scheme, you’re likely dealing with a scammer.
All tax refunds are based on financial information (that you presumably have) and are subject to verification by the IRS.
Scammers may try to extract personal information or make payment demands by contacting you via a call, text, email, or social media. If you receive communication from someone telling you they’re an IRS agent or threatening legal action if you don’t immediately pay your tax debt, avoid responding to this communication or opening any links within such messages.
Now that you know what you can expect from a tax refund scam, let’s get some common questions you might have out of the way.
The best way to confirm if a notice is real is to contact the IRS through their official phone number or website. However, there are other signs you can look for. For example, if you received the notice via email, look at the domain in the email address. The IRS only uses its official domain in its email addresses.
The IRS primarily communicates with taxpayers via mail at the address mentioned in your tax return. It’s rare for the IRS to contact you via phone, and it’s unheard of for the IRS to contact taxpayers via email, text message, or social media without prior communication via mail.
The most common IRS notices include notices for unpaid taxes, errors in tax returns, missing information or documents, and notifications of changes to tax refunds or payments. These notices use a professional tone, so if you see any threatening or unprofessional language, it’s best to investigate further.
Securing personal information and being vigilant against tax scam red flags can help you avoid most scams. While protecting personal information may seem tricky when almost every aspect of your life is connected to the internet, a comprehensive privacy solution like Cloaked can help.
Cloaked helps you create unique identities, and each identity comes with a second phone number and temporary email. This ensures your primary email and phone number remain private and out of a criminal’s reach.
Cloaked also offers a range of security and privacy features, including a password vault, secure storage for confidential information and documents, and identity theft protection.
Intrigued? Join Cloaked today and experience first-class privacy yourself.
