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Protect yourself from online scams

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Tax and IRS scams

Tax scams surge during filing season but operate year-round, exploiting fear of the IRS and tax authorities. These scams use aggressive tactics, threats, and sophisticated impersonation to steal money and personal information.

The Scale of the Problem

2024 Statistics:

  • $9.1 billion lost to tax-related fraud
  • $8,199 average loss per victim
  • 214,000+ IRS impersonation complaints received
  • Tax season (Jan-April): 300% increase in scam attempts
  • Ghost tax preparers: $6 billion in fraudulent refunds

How Tax Scams Work

Common Scam Scenarios:

1. Fake IRS Phone Calls

"This is the IRS. You owe $8,543 in back taxes.
If not paid immediately, a warrant will be issued
for your arrest. Press 1 to speak to an agent."

2. Phishing Emails

Subject: IRS Notice - Refund Approval Required

Your tax refund of $2,847 has been approved.
Verify your bank account details to process
your refund: [link]

3. Text Message Scams

IRS ALERT: You have unclaimed refund of $1,456.
Click here to verify identity and claim:
[shortened link]

4. Fake Tax Preparers

  • “Professional” offers to file taxes for lower fee
  • Promises inflated refunds
  • Files fraudulent return, steals refund
  • Victim faces IRS penalties and audits

Types of Tax and IRS Scams

1. Aggressive IRS Impersonation

The Scam:

  • Scammer calls claiming to be IRS agent with badge number
  • States you owe back taxes with penalties
  • Threatens arrest, deportation, or license suspension
  • Demands immediate payment via gift cards, wire transfer, or cryptocurrency
  • Uses caller ID spoofing to show “IRS” or “U.S. Treasury”
  • May have some of your personal information to sound legitimate

Reality: The IRS never initiates contact by phone, text, email, or social media.

2. Tax Refund Phishing

The Scam:

  • Email or text claiming you’re owed a tax refund
  • Directs you to fake IRS website (IRS-refund[.]com, not IRS.gov)
  • Requests personal information: SSN, bank account, date of birth
  • Steals identity and files fraudulent tax return
  • Criminals claim your real refund

Reality: IRS communicates refund status through your tax preparer or IRS.gov account.

3. Ghost Tax Preparers

The Scam:

  • “Tax professional” offers cheap tax preparation
  • Promises large refunds by fabricating deductions/credits
  • Files return electronically but doesn’t sign as required
  • Directs refund to their account or takes large cut
  • Victim is liable for fraudulent return

Red flags:

  • Won’t sign the return
  • Won’t provide PTIN (Preparer Tax Identification Number)
  • Charges fee based on refund amount
  • Promises unrealistic refunds
  • Requests refund be deposited to their account

4. W-2/Tax Document Phishing (Targeting Employees)

The Scam:

  • Email appearing to be from company HR or CEO
  • Urgently requests employees’ W-2 forms or tax information
  • Sent during tax season (January-April)
  • Email looks legitimate but is from spoofed address

Impact: Entire company’s employee W-2s stolen, used to file fraudulent returns.

The Scam:

  • Criminals steal SSN and personal information
  • File fraudulent tax return early in tax season
  • Claim victim’s refund before victim files legitimate return
  • Victim discovers fraud when IRS rejects their real return

2024 Impact:

  • 5.2 million identity theft tax returns blocked
  • $22 billion in fraudulent refunds prevented
  • Many still get through

6. Fake IRS Collection Notices

The Scam:

  • Official-looking letter mailed to victim
  • Claims victim owes taxes with penalties
  • Provides phone number or website for “payment”
  • May include fake case numbers, agent names

Reality: Real IRS notices include specific information and come via U.S. Mail (never email).

7. “Dirty Dozen” Tax Scams

Additional schemes the IRS warns about annually:

  • Offer in Compromise mills (false promises of tax debt settlement)
  • Fake charities (especially after disasters)
  • Inflated refund claims
  • Falsely padding deductions
  • Abusive tax shelters
  • Fraudulent fuel tax credits
  • Syndicated conservation easements

Red Flags: Identifying Tax Scams

🚩 Communication red flags:

  • First contact via phone, text, email, or social media (IRS always mails first)
  • Threatens arrest, deportation, or license revocation
  • Demands immediate payment with no appeals option
  • Requests gift cards, prepaid debit cards, wire transfer, or cryptocurrency

🚩 Payment red flags:

  • Asks for payment via:
    • Gift cards (iTunes, Amazon, Target, etc.)
    • Prepaid debit cards
    • Wire transfer (Western Union, MoneyGram)
    • Cryptocurrency
  • Demands payment to unusual payee (not “U.S. Treasury”)
  • Requests credit card over phone
  • Pressures you to pay without reviewing your account

🚩 Behavior red flags:

  • Aggressive, threatening, or abusive tone
  • Uses police or law enforcement intimidation
  • Claims local police will arrest you immediately
  • Threatens to suspend SSN or driver’s license
  • Knows some of your personal information (may be from data breach)
  • Refuses to provide agent ID, callback number, or opportunity to question

🚩 Tax preparer red flags:

  • Won’t sign your return as preparer
  • Doesn’t have PTIN (Preparer Tax Identification Number)
  • Prepares return on blank forms (not official software)
  • Promises specific refund amount before reviewing your documents
  • Charges fee based on percentage of refund
  • Directs refund to their account
  • Won’t provide you copy of return

How the REAL IRS Communicates

Initial Contact:

  • ✅ IRS always sends first notice via U.S. Mail (certified if serious)
  • ✅ Letters include:
  • Specific tax year and amount
  • Instructions for payment or dispute
  • IRS address and phone number to verify
  • Notice or letter number (CP### or LTR ###)

Payment Methods:

  • ✅ IRS accepts:

  • Check or money order (mailed)

  • IRS Direct Pay (from your bank account online)

  • Electronic Federal Tax Payment System (EFTPS)

  • Credit or debit card (through official IRS payment processors)

  • Cash (in person at IRS Taxpayer Assistance Center)

  • ✅ IRS never asks for payment via:

  • Gift cards

  • Prepaid debit cards

  • Wire transfer

  • Cryptocurrency

  • Third-party apps (Venmo, Zelle, Cash App)

What IRS Will Never Do:

❌ Call to demand immediate payment ❌ Threaten to have you arrested ❌ Demand payment without opportunity to question or appeal ❌ Ask for credit card numbers over the phone ❌ Threaten to suspend your SSN or driver’s license ❌ Send emails about refunds or tax bills ❌ Contact you via social media ❌ Leave pre-recorded threatening voicemails

What IRS Might Do:

  • ✅ Follow up by phone after mailing multiple notices (they’ll reference the notice)
  • ✅ Visit your home or business (rare, for serious issues, after multiple mail attempts)
  • ✅ Send collection notices via certified mail
  • ✅ Place lien on property or levy bank accounts (only after extensive notice)

Verification Procedures

If You Receive Suspected IRS Scam:

  1. Do not engage with the caller/sender

    • Hang up immediately
    • Don’t click links in emails
    • Don’t respond to texts
    • Don’t download attachments

  2. Verify any IRS contact independently:

    • Call IRS directly: 1-800-829-1040
    • Check your IRS account at IRS.gov/account
    • Review IRS notices at IRS.gov using notice/letter number
    • Contact your tax professional

  3. If you’re unsure you owe taxes:

    • Check “View Your Account” at IRS.gov
    • Call IRS at 1-800-829-1040
    • Contact your tax preparer
    • Never use phone numbers provided by potential scammer

  4. Verify tax preparer credentials:

    • Check IRS Directory of Federal Tax Return Preparers
    • Verify PTIN at IRS.gov
    • Check state license if CPA or attorney
    • Look for credentials: EA (Enrolled Agent), CPA, or attorney

For Employers (W-2 Phishing Protection):

  • Train HR staff on W-2 phishing scams
  • Require in-person or direct phone verification for W-2 requests
  • Never email sensitive employee tax documents
  • Implement email authentication (SPF, DKIM, DMARC)
  • Report W-2 data theft to IRS immediately (use Form 14242)

Real-World Examples

Case Study 1: IRS Phone Threat Scam (Tax Season 2024)

Victim: 72-year-old retiree in Arizona Loss: $12,000

The scam:

  • Received call from “IRS Agent Michael Peterson, Badge #AG4892”
  • Caller ID showed “IRS” and Washington, DC area code
  • Told she owed $47,832 in back taxes from 2019-2022
  • Threatened with arrest warrant if not paid immediately
  • Demanded payment via Target gift cards to “secure account pending resolution”
  • Instructed her to stay on phone while buying gift cards
  • Victim purchased $12,000 in gift cards before store clerk intervened

Red flags missed:

  • IRS never calls first without mailing notice
  • IRS never accepts gift cards as payment
  • Real IRS allows time for questions and appeals
  • Pressure to stay on phone is manipulation tactic

Result: $12,000 lost (unrecoverable). Scammers operated from call center in India.

Case Study 2: Tax Refund Phishing (January 2024)

Victim: Small business owner in Texas Loss: Identity theft, fraudulent return filed

The scam:

  • Email received: “IRS Taxpayer Assistance - Refund Notification”
  • Professional-looking email with IRS logo
  • Claimed $8,234 refund approved, need to verify bank details
  • Linked to IRSrefundportal[.]com (fake website that looked official)
  • Requested SSN, DOB, address, bank account number
  • Victim entered information, believing it was legitimate

Red flags missed:

  • IRS never emails about refunds
  • Website domain was not IRS.gov
  • Real IRS never asks for bank details via email
  • Email arrived before victim filed their tax return

Result: Criminal used stolen information to file fraudulent return and claimed $8,234 refund. Victim discovered fraud when their legitimate return was rejected. Took 6 months to resolve with IRS.

Case Study 3: Ghost Tax Preparer (Spring 2024)

Victims: 47 low-income taxpayers in Chicago Total fraud: $237,000 in false refunds

The scam:

  • “Tax professional” offered cheap tax preparation ($50-$100)
  • Worked out of community center, seemed legitimate
  • Promised large refunds by claiming false credits (EITC, education credits)
  • Filed returns electronically but didn’t sign as preparer
  • Directed refunds to his own bank accounts or took large “fees”
  • Used victims’ stolen identities to file additional fraudulent returns

Red flags:

  • Refused to provide PTIN
  • Wouldn’t give victims signed copies of returns
  • Promised specific refund amounts before reviewing documents
  • Charged fees based on refund size
  • Filed many similar fraudulent returns

Result: Preparer arrested, charged with wire fraud and identity theft. Victims faced IRS audits, penalties, and repayment of false refunds. Many victims were unaware returns were fraudulent.

Protection Strategies

During Tax Season:

  1. File early

    • File as soon as you have all documents (W-2s, 1099s)
    • Early filing prevents criminals from filing in your name
    • E-file is faster and more secure than paper

  2. Use reputable tax preparation

    • Trusted professional with PTIN
    • Established firm (H&R Block, Jackson Hewitt, local CPA)
    • IRS Free File program for income under $79,000
    • Official tax software (TurboTax, TaxAct, FreeTaxUSA)

  3. Protect your tax documents

    • Shred old tax documents
    • Secure W-2s and 1099s
    • Don’t carry SSN card or documents with SSN
    • Use strong passwords for tax software accounts
    • Enable two-factor authentication

  4. Never share information via:

    • Email
    • Text message
    • Phone (unless you initiated the verified call)
    • Social media
    • Unsecured websites

Year-Round Protection:

  • Get IP PIN (Identity Protection PIN) from IRS
    • Extra security code required to file return
    • Prevents fraudulent filing with your SSN
    • Apply at IRS.gov/ippin
  • Monitor your IRS account at IRS.gov
  • Check credit reports for suspicious activity
  • Secure your SSN (don’t carry card, limit sharing)
  • Be skeptical of all IRS-related contacts

For Businesses:

  • Train employees on tax-related phishing
  • Secure employee W-2 information
  • Implement email authentication (SPF, DKIM, DMARC)
  • Verify all requests for employee tax documents
  • Use secure methods for distributing W-2s
  • Report W-2 data breaches immediately to IRS

What To Do If You’re Targeted or Victimized

If You Receive a Scam Call/Email/Text:

  1. Do not engage

    • Hang up immediately
    • Don’t click links or download attachments
    • Don’t provide any information

  2. Report to IRS:

  3. Report to other authorities:

    • FTC: ReportFraud.ftc.gov
    • FBI IC3: ic3.gov
    • State Attorney General

If You Paid a Scammer:

  1. Contact payment method immediately:

    • Gift cards: Contact retailer with card numbers
    • Wire transfer: Contact Western Union/MoneyGram
    • Bank transfer: Contact your bank immediately
    • Cryptocurrency: Report wallet addresses to exchange

  2. Document everything:

    • Save emails, texts, voicemails
    • Note dates, amounts, payment methods
    • Keep all receipts and transaction records

  3. Report identity theft to IRS:

    • Complete Form 14039 (Identity Theft Affidavit)
    • Request IP PIN for future returns
    • Monitor IRS account for fraudulent activity

If Someone Filed a Fraudulent Return in Your Name:

  1. Respond to IRS notice (if you received one)
  2. File Form 14039 (Identity Theft Affidavit)
  3. Continue to file your legitimate return (paper file if e-file is rejected)
  4. Report to FTC: IdentityTheft.gov
  5. Place fraud alert with credit bureaus
  6. Request IP PIN for future tax years
  7. Monitor credit reports for fraudulent accounts

Note: Resolving tax identity theft can take 6-12 months. Keep detailed records of all IRS communications.

If You Used a Fraudulent Tax Preparer:

  1. Report to IRS:
    • Call 1-800-829-1040
    • Report preparer via Form 14157 (complaint) and Form 14157-A (return information)
  2. File correct return if the fraudulent one was inaccurate
  3. Pay any taxes actually owed (you’re responsible even if preparer made errors)
  4. Consider legal action against preparer (consult attorney)
  5. Request transcript of fraudulent return from IRS

Key Takeaways

  • ✅ $9.1 billion lost to tax fraud in 2024
  • ✅ IRS never initiates contact via phone, email, text, or social media
  • ✅ IRS never demands payment via gift cards, wire transfer, or cryptocurrency
  • ✅ File taxes early to prevent criminals from filing in your name
  • ✅ Get IP PIN from IRS for extra filing security
  • ✅ Verify tax preparers: Check PTIN, credentials, and reviews
  • ✅ Report scams to IRS, FTC, and law enforcement
  • ✅ Don’t panic: Scammers use fear and urgency to bypass rational thinking

Remember: The real IRS is not as scary as scammers make them seem. Real IRS notices come by mail with clear instructions and opportunities to question or appeal. Any phone call, email, or text claiming to be the IRS demanding immediate payment is 100% a scam. When in doubt, hang up and call the official IRS number directly.

Author:
How To Use Internet
Last updated:
11/30/2025