Tax filing time is rapidly approaching here in the USA – which means tax scams are coming, too. And with tools like ChatGPT, scammers are going to be able to create some convincing phishing emails and text messages. Let’s review some top tips for avoiding these scams. (While much of this article is focused on the United States, many of the same principles will apply globally.)
Identifying Tax Scams
Fake IRS (Internal Revenue Service) emails, phone calls and text messages will say that you’ve done something horribly wrong and owe lots of money. You must immediately send them money or face additional fines, jail time, etc. Others will tell you that you have to click a link or call someone to collect your tax refund. These are scams. This is not how the IRS operates. Specifically, the IRS will never:
- Contact you by email, text message, or social media to get your personal or financial information.
- Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments.
- Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
- Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
- Ask for credit or debit card numbers over the phone.
Responding to Scams
So, if you get such a call, just hang up; if you get such an email or text, delete it without clicking on any links. Don’t trust the listed identity of the sender – it’s sadly easy to spoof an email sender or caller ID these days. If you’re worried that the message may be real, you can always just call the IRS directly. If you want to check on your refund, you can go to the official site here.
Furthermore, if you get an email that appears to be an IRS scam, you can forward it to firstname.lastname@example.org. (If it’s a text message, you can take a screenshot and send it to that same email address.) Alerting the IRS will help them to track down these criminals and hopefully prevent them from harassing other people. Finally, the IRS has a great website with more details on how these scams work and what to do when you’re targeted by one.
Preventing Tax Return Fraud
If you work in the USA, you have an account with the IRS, even if you’ve never used it. You should plant your flag by claiming your account, before a scammer tries to do it on your behalf. If someone else manages to claim your account, they could potentially file a fraudulent tax return on your behalf claiming a large refund, leaving you to face the consequences.
The IRS also offers a pseudo-2FA (two-factor authentication) mechanism, too. Anyone who can file a tax return can request an IRS IP PIN. Once issued, you must use this 6-digit code to file your tax return. If you have someone file your taxes for you, they will need this PIN to do it. You can get all the details on this site and apply here. You don’t have to request a new PIN – once you sign up for this, a new one will be generated and sent to you each year.
It’s also recommended that you file your tax return as early as possible. This just reduces the amount of time that the bad guys have to get up to mischief.
Sharing Tax Data Securely
Most reputable tax preparers today have secure online portals (websites) for collecting your tax forms, financial statements and other sensitive personal data. These portals may be run by third party companies, but in the US there are decent regulations around the security financial data. So, I wouldn’t worry too much about uploading files and filling out personal financial information using the tax preparer web portal.
That said, if your tax preparer doesn’t have a secure online portal or if you simply don’t trust it, you can read this article I wrote about how to send files securely. This is a handy skill to have for other situations, too.
Avoiding “Free File” Scams
There have been some nasty bait-and-switch scams from big-name tax preparers where they lure you in with the promise of filing your taxes for free, but at the last minute force you to upgrade to costly “deluxe” or “premium” filing plans. The IRS and Federal Trade Commission (FTC) have been going back and forth with companies like Intuit (TurboTax) for years over their abuse of the federal Free File program. ProPublica has had several articles on this topic. (I also interviewed them about it a few years back.) It’s a real mess.
The IRS is currently piloting its own online free tax return filing program, since Intuit and others have abandoned the Free File program. It’s highly limited for 2024, but you can check here to see if you’re eligible.
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