What’s scarier than the IRS during tax season? Scammers.
That might sound like the punchline to a bad joke, but scams are a serious threat during tax season. According to the IRS, thousands of Americans have lost millions of dollars to tax scams.
Each year, criminals try to take advantage of taxpayers in a variety of ways. Here are some of the most common tax scams to be on the lookout for in 2023.
Phone scams from phony IRS agents
The IRS warns taxpayers each tax season to watch out for callers claiming to be IRS agents. They might notify you about a tax refund that you are owed. More likely, though, scammers will say that you owe taxes and have to make an immediate payment using a specific payment method, such as a gift card, prepaid debit card or wire transfer. Then they threaten that you will be arrested if you don’t pay.
Here’s how to know if a call that supposedly is from the IRS is a scam:
- The IRS does not call taxpayers to demand payment. It will mail a bill if any money is owed.
- The IRS will not threaten to send law enforcement to arrest you.
- The IRS will not demand that taxes are owed without giving taxpayers an opportunity to appeal the amount that is owed.
- The IRS will not call out of the blue about refunds.
If you get a call from someone claiming to be with the IRS, hang up.
Text message scams
The IRS has seen an increase in text messages that appear to come from the agency or a program linked to the IRS. The messages might offer assistance with tax issues, such as refunds or money owed, and will direct recipients to click on links within the message. However, these links go to bogus IRS websites or online tools.
These text messages are scams because the IRS does not use text messages to contact taxpayers—or contact taxpayers through social media. If you receive a message that appears to come from the IRS, take a screenshot of it and email it along with the date, time and phone number at which you received the message to email@example.com.
There are a variety of scams involving emails that appear to come from the IRS. The emails might be reminders to file a tax return, about the status of a refund or a tax account transcript. They typically include a temporary password to access files. However, the files that are included in the emails have malware that can steal people’s personal information from their computers. Or the emails might prompt recipients to click on a link to a website that will ask for their personal information or a payment.
Be aware that the IRS does not send unsolicited emails and does not notify taxpayers by email of refunds. If you receive an email supposedly from the IRS, forward it to firstname.lastname@example.org.
Fraudulent tax preparers
Watch out for people claiming to be tax preparers who can offer big refunds. They likely are scammers. According to the IRS, red flags that a tax preparer isn’t legitimate include the following:
- Preparers who won’t sign the returns they prepare.
- Preparers who require cash payments and won’t provide a receipt.
- Preparers who claim fake deductions to boost refunds or adjust clients’ income to qualify them for tax credits.
- Preparers who claim that refunds must be deposited first into their bank account.
Reputable tax preparers will have a Preparer Tax Identification Number and will sign and include this number on all returns that they prepare. The IRS has a searchable directory of preparers with the proper credentials.
Tax debt settlement scams
The IRS warns taxpayers who owe money to avoid services that claim to settle tax debts for pennies on the dollar. These services claim that they can help resolve tax debts through the IRS Offer in Compromise program. This is a legitimate program that allows taxpayers to apply to settle their tax debt for less than what is owed. However, debt settlement services charge excessive fees and often mislead taxpayers into believing that they can qualify for the IRS program even if they don’t meet the requirements.
Taxpayers who can’t pay what they owe should use the Offer in Compromise Pre-Qualifier Tool at IRS.gov to see if they are eligible for this program.
The IRS never calls, emails or sends text messages to taxpayers asking for their personal information or payment. So hang up on these calls, and don’t respond to emails or messages that appear to be from the IRS. If you need help filing a tax return, check out the free resources at IRS.gov or work with an authorized tax professional.