In 2024, Americans lost a staggering $12.5 billion to fraud. (1) With tax season upon us, it’s crucial to understand the tactics scammers use and how to protect yourself. Let’s dive into the world of tax scams and arm ourselves with the knowledge to stay safe.
Common Scamming Techniques
Tax fraud has evolved significantly over the past decade, shifting from broad-spectrum attempts to highly targeted, personalized attacks. Today’s scammers combine digital technology and social engineering to create sophisticated schemes that are increasingly difficult to detect. The rise of AI and machine learning has enabled more convincing phishing attempts, while the abundance of personal information online allows for highly personalized scams. As our lives become more digital, fraudsters have expanded their reach across various platforms, underscoring the need for heightened vigilance among taxpayers.
Some common methods that have emerged or been refined in recent years include:
- Impersonating IRS officials through phone calls or emails
- Sending phishing emails claiming to be from tax software companies
- Creating fake websites that look like official IRS pages
- Threatening legal action or arrest for unpaid taxes
Be on the lookout for these red flags:
- Unexpected requests for personal information
- Urgent demands for immediate payment
- Threats of legal action or arrest
- Requests for payment through unusual methods like gift cards or cryptocurrency
Prevention Strategies to Consider
Let’s explore some effective strategies that may help you stay one step ahead of potential scammers and help ensure a secure tax filing experience with these practical steps:
- Obtain an Identity Protection PIN (IP PIN) from the IRS
- Enable two-factor authentication on all financial accounts
- Use strong, unique passwords for each online account
- Be skeptical of unsolicited emails, calls, or texts claiming to be from the IRS
- Regularly check your credit report for suspicious activity
- Stay informed by visiting the IRS website for the latest scam alerts and updates.
Secure Payment Methods
When it comes to paying your taxes, consider these secure methods:
- Direct debit from your bank account
- Credit or debit card payments through official IRS payment processors
- Electronic Federal Tax Payment System (EFTPS)
Avoid using cryptocurrency for tax payments. The IRS does not accept crypto, and any request for such payment may clearly indicate a scam.
If You’ve Been Scammed
If you suspect you’ve fallen victim to a tax scam consider the following:
- Contact your bank immediately to stop any pending payments
- Report the incident to the Federal Trade Commission at reportfraud.ftc.gov
- File a complaint with the Treasury Inspector General for Tax Administration
- Alert the IRS by emailing phishing@irs.gov
Reducing the Risk
As we navigate the complexities of tax season, staying vigilant against scams is paramount. By understanding the tactics used by scammers and implementing strong prevention strategies, you can potentially reduce your risk of falling victim to tax fraud.
Remember, the IRS will never initiate contact through email, text messages, or social media to request personal or financial information. When in doubt, reach out directly to the IRS using their official contact information.
Staying informed and prepared is your best defense against tax scams. Consider scheduling a meeting to discuss your tax situation and ensure you take all necessary precautions to protect your financial well-being.
If you want to discuss this or have other questions about your financial situation, click the “Contact me” button below.
Source
(1) Federal Trade Commission. “Consumer Sentinel Network Data Book 2024.” Federal Trade Commission, 2025, www.ftc.gov/news-events/news/press-releases/2025/03/new-FTC-data-show-big-jump-reported-losses-fraud-125-billion-2024
We do not provide tax or legal advice or services. Always consult with qualified tax and legal advisors concerning your circumstances. We are not affiliated with or endorsed by any government agency and do not provide tax or legal advice or services
