Tax Preparation and Filing

Tax season is officially underway, and while refunds are one of the biggest things on consumers’ minds, scams should also be up there. This time of year is perfect for scammers to steal money, information, and data, all of which can leave consumers vulnerable. 

New research from McAfee found that nearly a quarter of Americans have either been involved in a tax scam or know someone who has. On top of that, more than half of all tax scam victims lose over $1,000. And as artificial intelligence (AI) gets stronger, so do scammers. 

Abhishek Karnik, Head of Threat Research at McAfee, shared with ConsumerAffairs about the biggest red flags to look out for, what to do if you fall victim to a scam, and everything consumers should know to stay safe this tax season – and beyond. 

What are the signs of a tax scam? 

According to Karnik, urgency is one of the biggest indicators that consumers are being targeted by scammers. 

“If a message demands quick action, use caution before interacting with it,” he said. “It’s best to avoid engaging with any unsolicited messages – do not click any links provided and go directly to the source for more information, whether that’s the IRS or your tax provider’s official website. 

“Consumers should ignore any unexpected messages demanding payment from the IRS. The IRS will typically contact you first by mail and will not reach out via phone call, text, email, or social media about your taxes. Any messages claiming otherwise are likely scams.”

Additionally, the rise of AI has made scammers harder to detect. This means consumers need to be more vigilant when interacting with unknown emails, texts, calls, websites, etc. 

“One of the most common methods scammers exploit is creating fake messages that mimic trusted sources, including the IRS and well-known tax service providers like TurboTax or H&R Block,” Karnik said. 

“Scammers use a range of tools to carry out their schemes, and AI is becoming an increasingly common part of their toolkit. They use it to craft convincing emails, texts, and even voice messages that sound or read just like the real deal. According to our latest report, nearly half (48%) of Americans have received fraudulent IRS communications, while 33% have received scam messages pretending to be from well-known tax preparation companies.”

What to do if you’re involved in a tax scam  

If you happen to find yourself involved in a tax scam, immediately report it to the IRS. 

“If someone’s Social Security Number or Tax Number has been stolen, they should immediately report the incident to IdentityTheft.gov,” Karnik advised. “Additionally, there are many valuable resources consumers can turn to for support, such as the IRS’ identity theft victim assistance program – or the Taxpayer Advocate service, which helps taxpayers protect their rights. 

“Consumers should take further steps to secure their information, such as changing passwords, using unique passwords for every account, enabling two-factor authentication, and monitoring financial accounts for suspicious activity. Victims can place a fraud alert on their credit reports and even consider a credit freeze, which restricts access to their credit and makes it difficult for identity thieves to open new accounts.” 

Is this a threat beyond tax season? 

The short answer to that question: yes. Karnik said that scammers’ efforts are heightened during tax season; however, in the weeks and months following tax season, many scammers try to take advantage of consumers looking for refunds or falsely accuse them of owing money to the IRS. 

“Consumers should remain vigilant and watch for unusual or unsolicited messages, even if they appear to come from a trusted source,” he said. “Be especially cautious after tax filing season, as scammers may send fake refund notices or PDFs as part of phishing schemes. 

“Criminals often reuse personal data gathered during tax scams for future schemes, such as phishing attacks or financial fraud. Staying cautious year-round is essential to avoid falling victim to evolving tactics, including fake IRS messages, refund scams, and impersonations of trusted tax services.”

The IRS is ready to receive your 2024 federal tax returns and many taxpayers expecting refunds are busy getting their forms ready. Scammers hope they may be just a little too eager and will let down their guard.

Two of the big three tax scams involve impersonation. The scammers want the victim to believe the communication they receive is from the IRS.

An IRS impersonation scam gives the scammer a lot of leverage. The target may be more trusting if they think they are dealing with the tax agency. Or, they may be more fearful and vulnerable to threats.

These scams usually come in the form of phone calls that appear to come from an IRS number. Once on the line, the fake IRS agent may give a phony badge number to establish credibility before issuing threats.

The target may be told that their return is being held because an audit shows they owe back taxes. The rattled taxpayer may be so anxious to receive their refund that they will provide a prepaid debit card or wire transfer as requested, not questioning that both methods of payment are odd for the IRS, which normally accepts a check.

But the impersonation scam is not always threatening. The fake agent may say they are reviewing the target’s return and just need some additional information to speed up the process, getting the refund approved faster. That usually includes personal information, such as confirming a Social Security number.

Email phishing scams

Email phishing scams are another form of imposter scam. The message appears to be from the IRS but they include a link directing the target to a fake IRS website where they will be told to enter personal information.

The emails may also tell the target to call a number where a scammer, pretending to be an IRS agent, will attempt to extract the same information.

Finally, taxpayers should watch out for scams that will try to use tax season to steal a taxpayer’s identity. This is often done by setting up a phony tax preparation service.

If a scammer can steal a taxpayer’s identity, they can file a fake return using the victim’s information and claim a refund, before the victim has a chance to file. That’s another good reason to file your return early.