Avoid last-minute tax scams

The deadline for filing taxes is April 17, but more than half of Americans haven't filed yet. For scammers, this means opportunity to cheat Americans out of their tax refunds.

Although the deadline for filing taxes - April 17 this year - is looming, more than half of Americans have yet to file. For many taxpayers, this simply means that they will get their refund a little later than usual. But for scammers, it means something much more sinister: opportunity. In the days leading up to tax day, scammers shift into high gear to cheat Americans out of their tax refunds.

The good news is that knowing how to identify two common last-minute tax scams can protect you from getting fooled.

1. The phishing scam. This scam can affect both those who filed and those who have not yet done so. In this scam, a taxpayer receives an email, allegedly from their tax preparer, the IRS, or bank. The fraudulent email prompts them to give up personal information like bank account info, Social Security numbers, and passwords--which scammers can use to steal their victim’s identity, empty their bank account, or even file a fraudulent tax return in their name. To protect yourself from this scam, it is important to:

    • Remember that the IRS will never initiate communication with you via email. If you receive an unsolicited email from the IRS requesting additional information, delete it. It is a scam.
    • Never “confirm” sensitive information through an email. If you receive an email that requests that you verify or provide sensitive information, it’s probably a scam. If you receive one of these emails, don’t reply to it or click on any links. If you’re not sure, call the IRS yourself at (800) 829-1040.

2. The erroneous refund scam. If money you were not expecting suddenly appears in your account, or if you receive an unexpected check from the government, you may think it is your lucky day. Unfortunately, odds are you just stumbled on the erroneous refund scam. In this scam, a fraudster steals customer data (from a tax return preparer, for example), files a fraudulent return in the customer’s name, and then has the fraudulent return money routed to the customer’s bank account.

Once the money is in your possession, the scammer will go to great lengths to get his hands on this money, including impersonating the IRS or a collection agency. Posing as one of these, the scammer will threaten their second victim (the individual he sends the fraudulent tax refund to) with jail time and fines in an attempt to get them to hand over the refund the scammer stole from the other taxpayer. If you receive a refund check or deposit that you were not expecting:

    • Do not cash the check or spend the money that was deposited into your account. This money is from a fraudulently filed tax return and will need to be returned to the IRS. Follow the steps outlined by the IRS to return the misdirected refund.
    • Do not communicate with the fraudster. When the scammer contacts you, pretending to be a figure of authority requesting the refund back, do not fall victim to high-pressure tactics or threats. Instead, hang up and call the IRS to let them know about the error and that you would like to return the fraudulent refund. You can reach the IRS at (800) 829-1040.
    • Contact your financial institution. If you receive a deposit that is not meant for you, a scam artist likely has your sensitive account information. Your bank can take steps to protect your account, such as setting up additional account security features.  If your personal information has been compromised, you’ll need to take the steps outlined at IdentityTheft.gov to protect yourself.

Both the IRS phishing scam and the erroneous refund scam are just two common last-minute tax scams. Unfortunately, there are many other forms of tax-related scams out there. In order to protect yourself, it is always good to:

  • File as early as possible. The sooner you file, the less chance a scammer has to file a tax return in your name and steal your refund.
  • Avoid fly-by-night operators. Instead, choose a preparer that is trusted in your community, and that has a Preparer Tax Identification Number (PTIN), which is required by the IRS to file taxes professionally.
  • Never pay a tax penalty to your preparer or a collection agency. You should always pay the IRS directly to avoid falling victim to an unscrupulous preparer.

Spotting a tax scam is not always easy. If you fall victim to one, immediately report it to the IRS and file a complaint at Fraud.org via our secure online complaint form. We’ll share your complaint with our network of more than 200 law enforcement and consumer protection agency partners who can and do put fraudsters behind bars.