Americans lose tens of billions of dollars to phone scams each year, many of which impersonate the Internal Revenue Service (IRS) and other government agencies. IRS and tax phone scams peak during tax season, but they’re a serious threat all year long.
Phone scammers recognize that when they disguise themselves as authoritative organizations like the IRS, people are more likely to cooperate with their demands. Consumers are more willing to reveal personal information to avoid some hypothetical punishment and retain good standing with government agencies. They’re encouraged to act quickly so they don’t have time to realize they’re being tricked.
IRS and tax phone scams are among the most dangerous of all phone scams because a successful ploy can give scammers everything they need to steal your money, property, and identity. Fortunately, through education and preparation, and with the right scam-blocking app, you can protect yourself and your family. Read on to learn how to recognize and prevent IRS and tax phone scams.
What are tax phone scams?
Tax phone scams are any kind of phone scams that use taxes as a pretext to steal your information. They might claim that you owe money to the government or that you’re actually owed money and can claim your refund by following the steps they outline. Criminals who pull these kinds of scams often impersonate official entities like the IRS to create a sense of severity and scare people into cooperating.
The Identity Theft Tax Refund Fraud Information Sharing and Analysis Center (ISAC), a collaboration of 73 organizations including the IRS, received almost 8 million reports of suspicious contact in 2022. This figure is up from 2 million in 2021, showing a stark increase in the prevalence of tax phone scams. These types of scams can be especially dangerous for taxpayers, making protection and prevention all the more important.
Types of tax phone scams
Tax and government phone scams can come in various forms. Understanding how they work and what to expect can help you recognize them quickly and avoid losing sensitive information or the contents of your bank account.
IRS impersonation scams
IRS phone scams are a prevalent and dangerous form of tax phone scam, as they use the authority of the IRS as a means to catch and retain your attention. Because of caller ID spoofing, scammers can even make it appear like they’re calling from an actual IRS number. Some use fake badge numbers or basic information that they know about you to convince you they’re legitimate.
Tax debt relief scams
Beware of scammers who try to convince you they can help you with your tax debt. They may claim they can reduce or eliminate a debt, stop collections, or deal with the IRS on your behalf. Unfortunately, they require upfront payment for their services, which likely don’t exist.
Fake tax preparation services
Whether it’s your first time or you’ve been filing for decades, preparing your taxes can be difficult and confusing. Scammers know this, and many pose as tax preparation services that can take the stress out of the process for a reasonable fee. A legitimate tax preparation service won’t call you to offer you their services.
Social Security number suspension
Some scammers try to steal your Social Security number, skipping your financial information and going for your identity itself. They may tell you your number has been canceled or suspended due to criminal activity or overdue tax payments. Then the scammer will ask for your Social Security number and other personal information to confirm your account activity, claiming that you could lose your benefits if you don’t comply.
Tax refund scams
Many tax phone scams are centered around tax refunds. A scammer might claim that your tax refund has been recalculated, you have an unclaimed refund from a previous year, or you can get a bigger refund by making your own W-2. The scammer hopes you’ll be entranced by the idea of a sizable payout and hand over your personal information without realizing you’re being scammed.
Form information solicitation
While some scammers use taxes as a means to steal your money, others are out for information they can use to steal your identity. When a scammer gets hold of your private information, they may use it to fraudulently file taxes on your behalf.
W-2
Your W-2 form contains sensitive information like your Social Security number and income information, which scammers can sell on the dark web or use to steal your identity. Scammers may target employees who work in accounting or human resources (HR) to solicit W-2 forms, posing as a company executive using a spoofed number or email address.
W-8BEN
The Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, or the W-8BEN, is an IRS form used to collect information from nonresident alien (NRA) taxpayers. However, scammers have created a modified version that collects data like passport information and pin numbers, which they can use to file fake returns in their victims’ names.
Employee Retention Credit (ERC) scams
The ERC is a refundable tax credit offered to businesses that kept employees on the payroll while being shut down due to COVID-19. Scammers encourage people to claim this credit regardless of their eligibility, often charging upfront fees for “help” filing. This is an especially dangerous scam because, in addition to losing money to the scammer, you might be audited by the IRS for improperly claiming the credit.
Ghost tax return preparers
A ghost tax return preparer is someone who is paid to prepare your taxes but refuses to sign them. Tax preparers are required to include a valid Preparer Tax Identification Number (PTIN) on any return they prepare. An illegitimate tax return preparer may falsify your return, so do your research before you choose a tax professional, and never accept the services of one who calls you out of nowhere.
Federal Deposit Insurance Corporation (FDIC) impersonation
The FDIC is a government agency that serves as an insurance policy for bank deposits, protecting consumers in case their bank fails. Although some scammers call people pretending to be the FDIC and requesting bank account details, Social Security numbers, and passwords, the FDIC will never ask for this type of sensitive information on the phone. In all likelihood, you will never receive a call from the real FDIC for any reason.
Fake Bureau of Tax Enforcement
The Bureau of Tax Enforcement might sound scary, but it’s actually harmless — because it’s not real. If you get a call or even a letter from this fake agency, you can simply ignore and report it.
Recognizing tax season phone scams
If you notice any of these red flags, hang up the phone or ignore the message. These warning signs are all confirmation that the person you’re talking to isn’t who they say they are.
Immediate payment demands
Even if you do owe money to the IRS, you’ll never be forced to pay immediately, over the phone, or using unusual methods like gift cards. Time is the enemy for scammers, so they try to get you to send over your financial information quickly, before you have time to think about it.
Threats of arrest or deportation
The IRS will never threaten you, but scammers will. Scammers may threaten arrest, deportation, or loss of your license if you don’t comply with their demands. If you’re being threatened over the phone, you’re not speaking with a representative of a government agency.
Unsolicited email or text messages
Under no circumstances will the IRS use email or text messages to contact you about a balance, bill, or tax refund. If you get an email or text claiming to be from an IRS agent, delete it and report it as a scam.
Unprofessional language and behavior
Legitimate tax professionals and government representatives won’t become agitated or threatening if you ask questions to verify the process is legitimate. Scammers, on the other hand, tend to unravel when their targets don’t immediately cooperate.
How the IRS will actually contact you
In reality, there are very few situations in which you’ll get a call from the IRS, and they will never send you an unsolicited text message. If the IRS needs to reach you, they’ll send you letters in the mail. They only call if you owe a significant amount of back taxes and have failed to respond to the mail they’ve sent you — they never call unless they’ve sent you a letter first.
Pro tip
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Protecting yourself from tax phone scams
As dangerous as tax and IRS phone scams can be, there are ways to keep your finances and your identity safe. Familiarize yourself with these steps so you can shut down scammers and protect yourself and your family.
Verify the caller's identity
In the age of caller ID spoofing, it’s imperative that you verify who you’re talking to on the phone. An authoritative caller ID reading and a badge number may be intimidating, but neither is necessarily legitimate. If you’re suspicious that the caller might not be the IRS, FDIC, or other organization they claim to be, hang up and call back at a publicly listed number.
Don’t share personal information over the phone
Unless you’re the one who made the call — and you’re completely certain of whom you’re talking to — do not give out personal information over the phone. Financial institutions and government agencies like the IRS will never ask for sensitive details by phone, and they generally won’t call you at all.
Educate yourself on tax scams
By learning about tax scams and understanding how to spot them, you stand a much better chance of protecting yourself from severe consequences, from financial disaster to identity theft. Stay up to date on the state of tax and IRS scams so you know what to look out for.
Monitor your credit report and tax account
It’s always wise to keep an eye on your financial accounts so you can catch potential fraud as soon as it happens. This is especially important if you’ve recently been on the phone with someone claiming to be from the IRS or another financial institution.
Download a call blocker app
It’s much easier to protect yourself from tax scams when they never reach your phone in the first place. An effective, third-party spam-blocker app like Robokiller, which uses a massive database of known spammers along with real-time data to eliminate scam calls and spam texts, is key to neutralizing scammers before they can run their schemes.
How to report tax phone scams
Reporting tax phone scams helps the authorities track down criminals and hold them accountable, and it helps protect the community from dangerous scam calls.
There are several ways to notify the authorities about tax phone scams:
- Contact your state tax agency or attorney general
- Report fraud to the IRS via email at phishing@irs.gov
- File a complaint with the Federal Trade Commission (FTC) through their Complaint Assistant
- Reach the Treasury Inspector General for Tax Administration (TIGTA) online or by phone (1-800-366-4484)
- Use USA.gov’s scam-reporting tool online
- If you’ve received a letter from the IRS, report fraudulent tax preparers by mailing Form 14157-A, Form 14157, and supporting documentation to the address designated in the letter. If you haven’t received a letter from the IRS but wish to report a fraudulent tax preparer, complete the same forms and mail them where you would send your Form 1040.
Protect yourself against tax scams
Like all phone scams, IRS and tax scams can be extremely dangerous. Scammers seek to steal sensitive personal information like passwords, Social Security numbers, or bank account details, all of which can be used to drain bank accounts and steal identities. Fortunately, there are ways to protect yourself and resources that can help.
In addition to understanding tax scams and knowing what to look out for, downloading a third-party spam blocker like Robokiller can shore up your defenses and put your mind at ease. Thanks to our robust algorithm fueled by machine learning, audio fingerprinting, and other cutting-edge robocall-blocking technology, Robokiller is 99% effective at blocking scam calls and texts in their tracks long before they can do any damage to your bank account or identity.
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Tax phone scams FAQs
What are tax phone scams and how do they work?
Tax phone scams are any phone scams that relate to taxes. Tax phone scammers may solicit your personal information with the intent to file fraudulent tax returns on your behalf, or they may sell your sensitive details on the dark web. Others may charge you for fake tax services or steal financial information in order to drain your bank accounts.
Does the IRS make phone calls to taxpayers?
Under normal circumstances, the IRS does not initiate contact with taxpayers by phone. If they need to get in touch with you, they’ll send you a letter in the mail. The IRS will only call you if you owe a significant amount of back taxes and have ignored their letters.
What are the common warning signs of an IRS scam?
IRS scams involve the impersonation of a member of the IRS, sometimes using spoofed phone numbers and fake badge numbers to appear more convincing. They may create a sense of urgency and respond with threats if you question their legitimacy. The biggest sign that an IRS call is a scam is that the call happens in the first place — if you get a call from the real IRS, you’re probably expecting it.
How can I report an IRS scam to the authorities?
There are many ways to report IRS scams to the authorities, and doing so can help them crack down on scammers as well as keep your community safe. Consider emailing phishing@irs.gov, using USA.gov’s spam-reporting tool, or contacting your state tax agency.
What steps can I take to protect myself from tax phone scams?
You can keep yourself safe from tax phone scams by understanding how they work, how to spot them, and when to hang up the phone. For full protection, download a dedicated spam-blocking app like Robokiller that prevents tax scams from ever ringing your phone.