The days of filing paper tax returns are over, and criminals are taking advantage. With taxpayers managing their sensitive information online, thieves are finding new ways to deceive victims. Just in 2023, the IRS reported $5.5 billion lost to tax fraud schemes. And the increasing prevalence of artificial intelligence means that tax scams this year are likely to be more sophisticated than ever.
Scammers have an arsenal of weapons, but regardless of their tactics, the goal is the same – to make you give them money or access to it. Here are the scams to watch out for this tax season:
Tax evasion scams. These scams often promise rewards that are too good to be true. Scammers claim to have expertise in exploiting loopholes to avoid taxes or maximize refunds. High-income filers are heavily targeted through seemingly legitimate annuity offers or tax shelters.
Refund scams. In this scam, a criminal impersonates an official notifying about an unclaimed or incorrectly calculated refund, encouraging the victim to share information – and possibly bank account numbers – to claim it.
Violation scams. This is a fear-based scam where the criminal impersonates an IRS official threatening some punitive action, claiming that the victim has committed a violation and needs to contact them to resolve the situation.
Filing support scams. Similar to tech support scams, criminals offer help in creating IRS accounts to assist in the online filing process. Often posing as tax preparers, scammers pretend to collect the victim’s personal information for tax forms they never intend to submit.
Social media scams. Social media is a great place for criminals to find potential victims and execute tax scams, falsely claiming to offer different types of services or possessing unique knowledge or access.
Recovery scams. Once a victim is deceived, criminals try to strike again – believing the victim is naive. Exploiting a moment of vulnerability, they contact the victim with promises to help recover their losses and use this as a gateway to commit further crimes.
While it’s not always easy to identify a scam, here are indicators to watch for:
• Promise of a large payment. If it sounds too good to be true, it probably is.
• Request for your account information. The IRS will never ask for your credit or debit account information over the phone.
• Random contact. The IRS contacts taxpayers by mail first and never through random phone calls or digital means. The IRS does not leave urgent or threatening pre-recorded voicemails.
• Demands or threats. The IRS cannot revoke your driver’s license, business licenses, or immigration status and cannot threaten to immediately involve local police. Taxpayers have the right to an appeals process, so any “now or else” message will not come from an official channel.
• Request to click on a web link. Strange or misspelled web links may lead you to malicious sites instead of IRS.gov.
The IRS recommends these best practices to protect against tax fraud:
• Start early. File early so criminals have less time to impersonate you.
• Create a verified account. Create your own IRS account before someone else does and use an Identity Protection PIN – a six-digit number known only to you and the IRS.
• Wait for written notification. Do not respond to any supposed communication from the IRS if you have not first received an official notification by U.S. mail. If you receive a call from someone claiming to be from the IRS, hang up and call the official number on the website before proceeding. Also, never click on a link sent digitally as initial contact.
Practice good cyber hygiene. Do not use public Wi-Fi when filing your taxes. Use strong passwords, secure network connections, and multi-factor authentication. Run all software updates and keep systems updated.
If you fall victim to a tax scam, report it to the IRS. For more tips on protection against scams, visit the PNC Security & Privacy Center at pnc.com.
A wrong click can cause tremendous damage that ultimately enriches the criminals. However, a little caution can go a long way in helping you avoid an expensive tax scam.
Source: StatePoint