How to Avoid Tax Scams

Scam artists seem to come out of the woodwork when there’s money involved — and taxes are no exception. Fortunately, if you familiarize yourself with common tax scams and understand what the IRS will and won’t do, it’s easy to avoid them.

Common scams

Tax scams take many forms. Here are some common schemes we’ve seen.

Calls from IRS impersonators. Fraudsters impersonating IRS employees call or leave a message on your voicemail. They typically use fake names and phony identification badge numbers and often alter the caller ID to make it look like a legitimate IRS number. They say you owe money to the IRS and threaten arrest, suspension of business or driver’s licenses, or even deportation—unless, of course, you pay promptly using gift cards, prepaid debit cards or wire transfers.

Phishing. Fraud perpetrators send fake emails designed to look like official communications from the IRS, tax software companies or even your tax advisor. The intention is to gain access to your financial information or trick you into downloading malware that allows access to your computers. These emails often contain links to bogus websites that mirror the official IRS site and ask you to “update your IRS e-file immediately.” Fraudsters use this information to file false income tax returns or engage in other identity theft schemes.

Property lien scam. With this tax scam, a thief sends a letter from a nonexistent agency asserting that you owe overdue taxes and threatens an IRS lien or levy on your property. Typically, the fake agency has a legitimate-sounding name, such as Bureau of Tax Enforcement.

These are just a few of the hundreds of tax scams the IRS sees on a regular basis. Fraudsters are continually developing new, more sophisticated schemes as well as variations of tried and true ones. It’s important to be on high alert whenever you receive communications that purport to be from the IRS, a state or local tax authority, or a collection agency working on their behalf.

Things to Remember

Tax scams can be complex and widely varied, but they’re easy to avoid if you know how the IRS operates.

The IRS will not initiate contact about a tax matter by phone, email or in person, without first sending you a bill or notice by regular mail delivered by the U.S. Postal Service. There may be special circumstances (such as an overdue tax bill, delinquent return, audit or criminal investigation) that prompt a visit from an IRS representative. But these visits are almost always preceded by a series of notices in the mail.

In addition, the IRS won’t:

• Demand you pay taxes immediately without an opportunity to question or appeal the amount they say you owe;
• Threaten you with arrest for nonpayment of taxes; or,
• Threaten you with deportation or revocation of a driver’s or business license.

Finally, the IRS will never demand payment using a specific method, such as a prepaid debit card, gift card or wire transfer.

Where to Turn

If you receive suspicious communications, contact your tax advisor. You can also report suspected phone scams to the Federal Trade Commission using the FTC Complaint Assistant at FTC.gov. Forward suspected phishing emails to phishing@irs.gov, and report IRS impersonation scams to the Treasury Inspector General for Tax Administration at treasury.gov/tigta.

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