Top Tax Scams to Watch Out for This Season
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As the days of filing paper tax returns are behind us, criminals are becoming more sophisticated in targeting taxpayers online. In 2023 alone, the IRS reported $5.5 billion in losses from tax fraud schemes. With the rise of artificial intelligence, tax scams are becoming more advanced and harder to spot. Here are some of the most common tax scams to be aware of this season:
Tax Avoidance Scams
These scams promise unrealistically high returns by exploiting alleged tax loopholes. High-income earners are often targeted with offers of seemingly legitimate tax shelters or annuities that promise to reduce tax liabilities.
Refund Scams
In this scam, criminals claim to be official representatives notifying victims about an unclaimed or inaccurately calculated refund. They will ask the victim for sensitive personal information, including bank account numbers, to "claim" the refund.
Violation Scams
This scam uses fear tactics. A scammer will pose as an IRS agent, threatening legal or punitive actions, and demand that the victim contact them immediately to resolve a supposed violation.
Filing Support Scams
Criminals posing as tax preparers will offer to help create IRS accounts or assist with online filings. They collect personal information but never file any tax forms, leaving the victim vulnerable to identity theft.
Social Media Scams
Social media is a common platform for criminals to target potential victims. Scammers may falsely claim to offer services or insider knowledge about taxes, hoping to exploit individuals seeking help or information.
Recovery Scams
After a victim has already been scammed, criminals may attempt to strike again. They contact the victim with promises of helping to recover the lost funds, using this as an opportunity to commit additional fraud.
Warning Signs of a Scam:
Too good to be true: Offers of huge payouts are often a red flag.
Request for sensitive information: The IRS will never ask for credit or debit card details over the phone.
Unsolicited contact: The IRS only contacts taxpayers by mail first. They won’t make random phone calls or send urgent, threatening voicemails.
Threats and demands: The IRS does not revoke licenses, immigration status, or immediately involve local law enforcement. Any threat with a “now or else” tone is likely a scam.
Suspicious links: Be cautious of misspelled or odd-looking URLs. They can lead to harmful websites.
Tips for Protecting Yourself:
File early: This reduces the window for criminals to impersonate you.
Set up a verified account: Create your own IRS account and use an Identity Protection PIN (IP PIN), a unique number that only you and the IRS know.
Wait for official mail: Do not respond to any communication unless you’ve first received a formal notification from the IRS via U.S. mail. Always call the IRS directly if you receive an unsolicited call.
Cyber Hygiene:
Avoid using public Wi-Fi when filing taxes.
Use strong passwords, secure connections, and enable multi-factor authentication.
Regularly update your software and keep your systems secure.
If you fall victim to a tax scam, report it to the IRS immediately. For more tips on protecting yourself from scams, visit the PNC Security & Privacy Center at pnc.com.
A little caution can save you from a costly scam this tax season.
