The threat of tax-based scams is sufficiently widespread that the IRS publishes an annual “Dirty Dozen” of the most common--and effective--tax-related scams of the year. The list from 2019 targeting taxpayers included some familiar tactics, and others you may not know.
Phishing: Scammers commonly target taxpayers by pretending to be from the IRS or a collection agency operating on its behalf. Don’t fall for it.
“Phishing emails take many forms,” says CyberScout founder and chairman Adam Levin. “They typically focus on getting enough of your personally identifiable information to commit fraud in your name, making you a victim of identity theft if you take the bait.”
The best defense? Don’t even risk opening an email from the IRS.
“The IRS only contacts taxpayers via the U.S. Postal Service,” says Levin. “While it may feel strange, should an email from the IRS arrive in your inbox, don’t reply. Trash it.”
Vishing: Tax scams aren’t limited to emails. Scammers will often call their intended victims, and pretend to be with the IRS. Caller-ID may display “Internal Revenue Service.” Don’t fall for it.
“If you get a phone call from someone claiming to represent the IRS, hang up,” says Levin. “It doesn’t matter what your caller ID says. Spoofing a number is not a terribly difficult project for someone working an IRS phone scam. The caller may threaten you with jail time. He or she may know details about you. It may seem real. The IRS will never initiate contact with you by phone. If they do, believe me, it’s not them — it’s a scam.”
Identity theft: “With tax-related identity theft someone posing as you steals your tax refund,” says Levin. “Armed with your Social Security number, date of birth and other pieces of your personally identifiable information, it is easy to rob you.
“The information needed may be readily available on the dark web if you’ve been the victim of a data breach. With that information, a scam artist just needs to use an untraceable connection to the Internet, fill out a fraudulent tax return online and walk away with a refund that could be and should have been yours.”
Tax Preparer Fraud: According to the IRS, most taxpayers hire someone else to do their taxes. Unfortunately, this means placing an enormous amount of sensitive data in the hands of a relative stranger--someone who could be unscrupulous or even criminal.
“When it comes to choosing a tax preparer, there should be zero guesswork,” says Levin. “Hire someone you’ve thoroughly checked out, and who has three solid references — at least one of them coming from someone you know personally and trust.”
This isn’t to suggest that businesses aren’t also facing serious risk during tax season, or that they can’t fall prey to their own version of identity theft.
“Just like individuals, businesses may have their identities stolen and their sensitive information used to open credit card accounts or to file fraudulent tax returns for bogus refunds,” warned the IRS in a press release.