The 13 Latest Tax Refund Scams You Need To Know (2024)
March 1, 2024
Criminals use the stress of dealing with the IRS to commit tax refund fraud and even steal your identity. Here’s how to protect yourself, today.
Here’s How Scammers Are Targeting You This Tax Season
Tax refund scams are quickly becoming one of the most common ways thieves steal your money and even your identity. Criminals prey on the stress of paying taxes or talking to the Internal Revenue Service (IRS) to steal sensitive information and file fraudulent tax returns. And the problem is only getting worse.
The IRS flagged 2.4 million tax returns for potential identity theft and fraud in 2023 alone — with fraudulent returns totaling $13.8 billion [*].
Few of us are tax experts. So how do you spot a tax refund scam, IRS imposter, or the many other ways criminals take advantage of tax season to steal from you?
What Are Tax Refund Scams?
Tax refund scams are a type of financial fraud where criminals impersonate IRS agents or other government representatives and attempt to trick you into sending them personal information or giving them access to your tax refund.
Tax scams are lucrative for scammers because few of us have experience dealing with the IRS. And once they have your information, it opens the door to other frauds and even identity theft.
Thieves can collect payment posing as the IRS or charge for fake services. They can file claims in your name and collect a refund from the government. And they can use or sell your personal information on the Dark Web for tax-related identity theft.
The 13 Tax Refund Scams To Beware of This Tax Season
1. Phishing emails asking to verify information
How it works: Phishing is a type of scam email designed to steal your personal information. Scammers will send you an email pretending to be from the IRS, often with threatening or urgent subject lines demanding payment.
When you click on the link in a phishing scam, you’ll end up on a page that looks like the IRS website. But it’s a hoax. Any information you give them – your Social Security number or credit card numbers — goes straight to the scammer. You could even end up with malware on your device that can steal your information or let scammers hack your email without you even knowing.
How to avoid it: Check the “From” name before clicking any link in an email. Scammers will change their names to look like they’re coming from the IRS or another agency. But if you hover over or click on their name, it will reveal their actual email. If it’s not from a .gov address, it’s a scam.
Tip! For added protection, use a VPN with Antivirus to protect your devices and home network from viruses and malware.
2. Phone calls demanding money
How it works: Scammers use bots and robocallers to send thousands of calls at once pretending to be from the IRS. When you answer, they’ll say you owe taxes, demand payment immediately, and may threaten your arrest if you don’t pay. They may even try to steal your Child Tax Credit with information they trick you into sharing.
. . . But any money or information you give up goes to a crook, not the IRS.
How to avoid it: Phone scams can pretend to be from the official IRS phone number, so don’t trust caller ID. The caller may give you a badge number, which can be fake, or even know your SSN, which can be stolen.
If you get a call from someone saying they’re with the IRS, ask for a reference number. Then, hang up and call back using one of the official IRS phone numbers.
3. You discover a tax return was filed under your name
How it works: In 2022, there were 7.8 million reports of tax-related suspicious activity [*]. Tax identity theft occurs when, without your knowledge, someone submits a tax filing under your name. Surprisingly, this doesn’t require any tax documents — all a thief needs are your name, Social Security number, and date of birth.
The fraudulent return will show a large refund, which the thief will deposit. When you go to file your taxes, you’ll get an alert from the IRS that someone else has already filed as you.
While you’re still legally eligible for your refund, the process to confirm your identity is complicated. And the thief has your personal information.
How to avoid it: Set up an Identity Protection PIN (IP PIN). This is a voluntary step the IRS offers to secure your return. You’ll set up a new six-digit passcode each year you’ll use to send in your returns. This serves as a password to verify your real identity and prevent an impostor from filing in your name. You can set one up at the official IRS IP PIN page.
4. Claiming your Social Security number has been or will be suspended
How it works: Scammers will make bold threats to try and get you to send them the information they want. In this scam, a fraudster will claim your Social Security Number has been or will be revoked or suspended due to some tax issue.
How to avoid it: Hang up, delete the email, and ignore the scam. Your Social Security number can’t be suspended, canceled, frozen, or revoked.
The big picture: Protect your sensitive information like your Social Security number as much as possible — even just the last four digits. Avoid giving it out whenever possible, and never share it with someone who calls you.
Tip! A SSN Monitoring service can help alert you if someone is using your Social Security number without your consent.
5. “Ghost” tax preparation scams
How it works: A scammer posing as a tax preparer pretends to file your taxes. But they may use exceptions that don’t apply, leave mistakes on your return, or even turn around and file a fraudulent return in your name.
How to avoid it: Only provide personal or tax information to a verified tax preparer you’ve chosen to work with. All verified tax preparers have an IRS Preparer Tax Identification Number (PTIN) which you can request. You can also search for them in the official IRS directory.
6. Email requesting additional tax forms
How it works: If you get an email from the IRS demanding you send a tax form, beware. There are several legitimate forms taxpayers may need to fill out, but most of these (including W-9 for freelancers and W-4 forms for employees) are sent to companies and never to the IRS.
How to avoid it: Ignore the message and report the fraud to the IRS. The IRS won’t contact you by email, so any request for forms like this is an example of fraud.
7. You’re notified the IRS owes you an extra refund
How it works: In this scam, you receive a message (typically an email) saying the IRS has recalculated your return and you’re owed an extra refund. But to get the money, you’ll need to click a link and confirm personal or financial information. This is a classic example of phishing — there is no extra refund, and the information goes straight to identity thieves.
How to avoid it: Don’t trust emails that claim to come from the IRS. If they need to contact you, they’ll do so first with a letter. If you’re curious about the state of your return, you can use the IRS’ Where’s My Refund? tool.
8. Overdue stimulus payments or unemployment benefits
How it works: The pandemic has opened up new opportunities for Covid-related scams. Some of the more common scams are PPP fraud and people claiming you’re due extra or overdue stimulus payments or unemployment checks.
This message will either ask you to click a link and “verify” your personal information or tell you to pay a fee to receive payments. But in both cases, the information or money goes to a tax scammer instead.
How to avoid it: Remember that the IRS will never contact you over email. Instead, log into your IRS account to see the status of your benefits.
9. A call from a tax agency other than the IRS
How it works: Scammers can also pretend to be from real or fake tax agencies on the phone. For example, the Taxpayer Advocate Service or the Bureau of Tax Enforcement. The Taxpayer Advocate service is real, but doesn’t call taxpayers without reason. The Bureau of Tax Enforcement is not a real organization.
How to avoid it: Don’t trust unsolicited calls from people claiming to be from government agencies. Get a reference number, hang up, and call back from an official phone number.
10. Overdue payment scam
How it works: This scam happens after you receive a direct deposit refund — either real or fraudulent. You’ll get a call or text from someone posing as an IRS agent [*]. They’ll claim your refund was too high, and you’ll need to return the extra money, usually via wire transfer or gift cards.
How to avoid it: Be wary of sending money to agencies through means that can’t be reversed. While there are times when you’ll need to pay back an accidental refund, the IRS will let you know by mail and will accept multiple payment methods.
11. Offer in Compromise (OIC) scams
How it works: Offer in Compromise is a legitimate program by the IRS to help those struggling to pay tax debt. But it’s only available for taxpayers who meet a specific set of criteria. Scammers will make big promises and charge for “assistance” to apply to the program, even if you’re ineligible.
How to avoid it: Before applying to the Offer in Compromise program, use the IRS’ free OIC pre-qualifying tool.
12. Demanding payment in gift cards or cryptocurrency
How it works: A scammer may call — or answer the phone if you return a threatening message or text — and demand payment for penalties or overpaid taxes in gift cards, like those from iTunes or Amazon, or cryptocurrency, like Bitcoin.
How to avoid it: Ignore the threats. The IRS doesn’t accept gift cards or cryptocurrency as payment, so anyone asking is a scammer.
Did you know? Some crypto scams to watch out for include fake crypto websites that steal your investments, “pump-and-dump” schemes, and phishing attacks designed to gain access to your crypto wallet and transfer out your coins.
13. Requesting a W8-BEN
How it works: The W8-BEN is a legitimate IRS form for non-US workers. But scammers will request you fill out a fraudulent version of the form that includes extra information like your passport number, bank account information, and more.
How to avoid it: Avoid downloading attachments (even PDFs) as they can contain malware. If you need to fill out any form, download it directly from the IRS forms resource.
How To Know If You’re The Victim of Tax Refund Fraud
If you think you’ve been targeted by a tax scammer, look for the warning signs of identity theft from tax fraud:
- The IRS says your return has already been filed. You could mail your taxes and receive a letter from the IRS. Or you could try to file your taxes online and get a notification. Either way, the IRS will let you know that a return has already been filed under your Social Security number.
- You’re notified of an unfamiliar IRS.gov account. You haven’t opened an account at IRS.gov, but you get a notice about a new account opened in your name.
- You receive an unsolicited tax transcript. A tax transcript is an official summary of your tax return. If you didn’t request a transcript but receive one, it could be a warning sign of someone else acting on your behalf.
- You receive unfamiliar tax documents. You could get tax documents like W-2 or 1099 forms you don’t recognize. Typically, these come from employers you’ve never worked for. This may indicate someone has taken a job using your identity.
- Your bank blocks your tax refund check. If a bank blocks a tax refund check or it’s rejected after you deposit it, this could indicate the check you’ve cashed was fraudulent and not from the IRS.
- You receive a refund check before you’ve filed. If you haven’t filed but get a refund check, it’s either an error or a scam. The IRS does sometimes make mistakes, but it’s most likely a fraud. Either way, don’t cash the check — even if it’s an authentic IRS refund, you’ll need to pay back the incorrect amount (plus interest).
- Your tax preparer doesn’t sign your return. Tax professionals must sign the returns they prepare. Any preparer who doesn’t can’t be trusted to handle your taxes.
- Your tax preparer can’t explain discrepancies on your return. It’s your legal responsibility to verify the information in your tax return before filing. If the return someone prepared for you doesn’t match the data you shared, it could be part of a fraud.
Were You The Victim Of a Tax Scammer? Do This ASAP
If you think you might be a victim, here are the most important steps you should take.
- If another return has been filed in your name, fill out an Identity Theft Affidavit, print it, and mail it with your tax return. You can also request a copy of the fraudulent return, following IRS instructions.
- If someone claims you owe taxes, first verify what you owe. You can do this at the official IRS payments page. If the amount is different than what someone has claimed, you know it’s an imposter. If you’re on the phone with an imposter, you can hang up. If you’ve received fraudulent documents, keep them to report the scam.
- If you’ve sent money to a fraudster, immediately cancel the transaction if possible. If you’ve given out your bank or credit card information, call the fraud department of the impacted company. Request to freeze or cancel your account immediately.
You should also follow the steps in the fraud victim’s checklist and report the fraud. Forward scam emails to phishing@irs.gov. Forward scam text messages to 202-552-1226, then send a text sharing the number that contacted you.
If you’re the victim of identity theft, you should also file a report with the FTC at IdentityTheft.gov and the Treasury Inspector General for Tax Administration (TIGTA). Then, take steps to protect your identity. A fraudulent tax return means the thief has your personal information, including your Social Security number. (Be especially careful here as it can be incredibly difficult to change your Social Security number, even after identity theft.)
Set up a fraud alert or credit freeze at the three credit bureaus. Protect your accounts using strong, unique passwords and two-factor authentication.
Even if you’ve resolved a tax scam, you should consider identity theft protection as criminals can use your information to open fraudulent loans, commit bank scams, change your address and steal your mail, or even commit crimes using your name.
Protect Yourself Against Tax Scams
Tax season is full of scams. But with a bit of diligence, you can spot an IRS imposter and protect your money and sensitive information. For added protection and to prevent identity theft, make sure you file your taxes early. The sooner you file, the less time you give fraudsters to impersonate you. If you work with a tax preparer, vet them properly and avoid anyone who claims they’ll be able to get you a large refund (before seeing your information).