Watch out for these common tax scams

Tax season is an ideal season for scammers.

People are stressed-out and intimidated by the prospect of filing taxes. As a result, they may be more vulnerable to deception, including scammers' efforts to obtain their valuable personal information, pursue refunds in a taxpayer's name, and trick them into paying for fraudulent tax services.

The end goal for scammers is to end up with someone else's money, one way or another.

If you don't want them to steal yours, get familiar with the following types of scams:

1. Tax scammers want your data.

Dan Dwyer, an attorney in the Federal Trade Commission's (FTC) Division of Financial Practices, says that scammers often use tax season as a way to steal people's personal and financial data.

One way they do this is by posing as a representative of the Internal Revenue Service (IRS) and using various high-pressure tactics by phone to make consumers hand over their Social Security number and bank account information. For example, they might tell the consumer there's an immediate deadline for providing that data.

Consumers should remember that the IRS initiates contact by letter, and they will not use aggressive techniques to get a taxpayer's personal information. While there are circumstances in which the IRS may call, they are generally preceded by sending notices and letters in the mail.

Scammers also send emails disguised as communication from the IRS, which can include email addresses, signatures, and logos that look authentic. The links in these emails may take recipients to fraudulent websites where they'll be prompted to input their personal data.

"We tell people, 'Never click on any links that may come through any of these communications, and then check the IRS directly for any information you need,'" says Dwyer.

Consumers should generally view phone calls and emails purportedly from the IRS as highly suspicious, especially if someone has yet to hear from the government agency at all about their filing or refund.

Unfortunately, scammers have found ways to defraud people through the mail, too. One scheme that emerged in 2023 involved a mailing on IRS masthead that told recipients they had an unclaimed refund. The letter directed taxpayers to call a number for more information and also asked for sensitive information, including a picture of the recipient's driver's license.

Dwyer says that there are other sophisticated strategies for tricking consumers, like spoofing the IRS in caller ID. In this scenario, the scammer has altered the caller ID to make it appear as though the IRS is calling. Dwyer says that it's best to let the call go to voicemail and then search the number online to see if it's been reported as part of a scam. (Learn more about impersonation scams on the IRS' website.)

If you want to review the status of your return after it's been submitted, go directly to the IRS refund tracker website or the IRS2Go app instead of trusting someone who contacts you electronically. You can also call the IRS directly at 1-800-829-1040.

For more tips on avoiding impersonation scams, visit the IRS' webpage on how to know if it's really them contacting you.

2. Scammers want your refund.

A tax refund is quite the prize for scammers, and they can get it by filing a return in a consumer's name and providing the IRS with their own banking information to receive the payment electronically.

In order to do this successfully, they need to possess stolen personal information, including a Social Security number.

One way to prevent this outcome is by filing your taxes as early as possible. Otherwise, consumers whose refunds have been stolen won't learn about the theft until they try to file a return themselves.

Another way to stop identity thieves from claiming a refund that's not theirs is to avoid sharing the personal information needed to file a fake return. Impersonation scams are not limited to tax season, so beware year-round of odd or aggressive requests for sensitive information. Victims of identity theft, or those who know that their sensitive data was breached, might be particularly cautious and use a credit monitoring service to see if their information is being used to open new accounts.

3. Scammers want you to pay for their services.

Scammers know that consumers are looking for accessible and professional tax filing services, and they target people with deals that seem like they can't be true, says Dwyer.

This is particularly common when it comes to tax debt. A taxpayer will receive information from the IRS about paying that debt. It's also possible to apply for a payment plan directly with the IRS on the agency's website.

But a taxpayer facing down years of tax debt payments is especially vulnerable to a scammer who poses as a professional promising to negotiate with the IRS for a reduced settlement.

"Be very skeptical of claims of sweeping relief," Dwyer says.

He adds that the IRS doesn't handle tax debt like a negotiation. Instead, it's more like a math equation that factors in what the IRS thinks it can reasonably collect from a taxpayer. The agency rarely accepts an offer in compromise unless it's greater than what the IRS has proposed, says Dwyer.

He recommends that consumers consult the IRS' guide to choosing a tax professional, as well as its directory of federal tax return preparers with credentials and certain qualifications. While anyone with a preparer tax identification number can file a return on someone's behalf, it is best, if possible, to select a professional with a high level of experience and training.

Dwyer says that red flags related to this scam include a preparer who promises reduced payments without even reviewing a taxpayer's filing.

What to do if you are scammed.

The aforementioned scams are among the most common during tax season. The IRS maintains its own list of tax scams, which is worth reviewing.

Dwyer recommends that consumers who've been scammed report it to the FTC. While the agency can't help individual consumers with recourse or restitution, it can pursue action against fraudulent individuals and companies. The FTC shares information about scams with law enforcement, and warns people about emerging trends.

Victims of identity theft can use the FTC's website IdentityTheft.gov to report theft and get a step-by-step recovery plan for critical tasks like closing accounts, correcting a credit report, and reporting a misused Social Security number.

Taxpayers who need assistance dealing with a return that's been affected by a scam can contact the federal Taxpayer Advocate Service. The independent organization is housed by the IRS and provides advocates to taxpayers who can't resolve tax problems on their own.

Otherwise, Dwyer says consumers can seek legal representation to try to recoup any stolen money, including a tax refund.