It’s tax season, and while that may mean you’re drowning in forms and paperwork, for scammers it means millions of taxpayers they can potentially dupe out of refunds or scare into making irrational moves. Here’s what you need to know about tax return scams and how to avoid them.
How the scams play out
In a tax return scam, a fraudster steals a taxpayer's personal information and files a fake tax return on their behalf. The scammer will have the refund deposited into the taxpayer's checking account. After the refund is deposited, the scammer will call the victim, impersonating the IRS and claiming the refund was mistakenly inflated. They'll instruct the victim to return the alleged extra funds via gift card or wire transfer. Of course, this money will go directly into the scammer's pockets.
In another variation of a tax return scam, a fraudster steals a taxpayer's personal information and files a fake tax return on their behalf, as described in the first scenario. However, instead of directing the refund into the victim's account, the scammer deposits the funds into their own account. When the taxpayer tries to file a legitimate return, the IRS will inform them they've already filed one – and collected the refund.
Unfortunately, tax return scams are relatively easy to pull off. Scammers only need to get their hands on a victim's name, Social Security number, and date of birth. All other information, including income and employment details, can be fabricated. Often, scammers get the information they need for the scam from other employees who work at the same company as the target and are willing to sell information about their co-workers to fraudsters.
Fortunately, there are steps you can take to limit your vulnerability to tax return scams. Here’s how to help keep your money and your information safe this tax season:
File Your Taxes Early
This gives scammers less time to use stolen information.
E-file with Care
Only use a secure computer to file an electronic tax return. Do not use public Wi-Fi to e-file your taxes.
Keep Your Tax Returns in a Secure Location
Remove your returns from your computer after filing, and store hard copies of all tax forms in a safe place.
Never Download Links or Attachments from Unverified Sources
These may contain malware, which can infect your computer and deliver your information right into the scammer’s hands.
Never Share Personal Information with an Unknown Contact Over the Phone or Online
Personal information should always be kept personal. It's also important to be aware of the following information to help you identify possible scams:
- Refund checks will only be deposited into a taxpayer's account if they have filed taxes. If a refund lands in your checking account and you know you haven't yet filed taxes, you are likely the victim of a tax return scam.
- The IRS never demands payment by a specific method. If you’re asked to wire money to the “IRS” or pay by gift card, you’re talking to a scammer.
If You’ve Been Targeted
If you receive a phone call or letter from someone claiming to represent the IRS and informing you that you owe tax money, you can verify the claim by calling 1-800-829-1040. Emails allegedly sent by the IRS are scams, as the IRS does not reach out to taxpayers via email.
If you have yet to receive your tax refund within one month of filing, you can check on your refund status on the IRS webpage. If the site shows that your refund was issued but you haven’t received it, you may be the victim of a tax return scam and identity theft. Alert the IRS at 1-800-908-4490.
Stay alert and safe this tax season!