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IRS Scams: Red Flags to Watch For

IRS Scams: Red Flags to Watch For

Jenius Bank Team3/29/2024 • Updated 4/4/2024
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Don’t get tricked by scammers. Tax season is stressful on its own, but with IRS scams on the rise, you want to be even more vigilant. Since 2018, over 75,000 taxpaying Americans have fallen victim to scammers pretending to be IRS representatives and lost more than $28 million.1At Jenius Bank, we want to help you keep your money safe and reduce your risk of falling victim to these scammers. Read on to learn about the most common tax and IRS scams and what you could do to avoid falling for them.

Key Takeaways

  • IRS scammers use phone calls, emails, social media messages and more to trick you into sending them money.
  • The IRS rarely initiates contact by phone to demand payment or to discuss errors on your tax return.
  • If you suspect a scam, check with the IRS directly to verify the status of your account. If you think you’re the target of a scam, report the fraudulent activity.

Types of IRS and Tax Scams

It’s becoming common for scammers to impersonate IRS employees to trick you into sending them money. Here are a few of the most common types of scams people encounter.
  • Phone call scams: Scammers call your home or cell number pretending to be IRS agents and say you owe the IRS money. Then they instruct you to send money and may threaten you with lawsuits or arrest if you fail to comply.
  • Email and phishing scams: These scams are messages from businesses claiming to offer services to settle IRS debts. If you have tax debt, you may be able to settle it, but you need to do so with the IRS directly. Furthermore, you usually need to issue the request yourself—the IRS won’t call or email you.2
  • Offer in Compromise mills: An Offer in Compromise allows qualified taxpayers to settle their debt for a lower amount than what they actually owe. Scammers target people who may not qualify for this program and claim they could resolve the tax debt at a low rate. When you pay for their services, they pocket your money, and you never hear from them again. Worse, you still owe the IRS.3
  • Refund scams: Scammers send letters on fake IRS letterhead asking targets to send specific information to receive their tax refund. They may use your information to file a fake tax return and take your refund.4
  • Identity theft: Scammers may claim that your identity was stolen or that there was a mix-up with your tax return. They claim you could fix the problem by sending them money. Oftentimes they ask you to send payment by purchasing gift cards.5
Keep in mind that these are just some of the most common scams. If you’ve been contacted by someone claiming to be an IRS agent, don’t respond. Call the IRS directly at 1-800-829-1040 and make sure any messages you received were real. You’re also able to report scammers through the IRS Scam Reporting website.

Red Flags to Watch For

Scammers have to work fast to take advantage of tax season. That speed often creates a few signals that they are faking. Here are a few red flags to watch for.6
  • Urgent or threatening language: Scammers want to convince you to pay them immediately. They often use pressure, such as threatening to cancel your Social Security number, or putting a lien against your home or car. Their alarmist language aims to have you act out of panic rather than logic. Real IRS agents never threaten a person with legal action.7
  • Requesting payment through strange channels: The IRS expects you to pay any tax liability via check or online. They never ask you to wire money or pay with gift cards or prepaid debit cards.8
  • Requesting personal information: If scammers get your Social Security number, bank account details, or credit card number, they could steal money from you. If someone from the IRS is asking for personal information, hang up and call the IRS at 1-800-829-1040 to make sure the request is legitimate.
  • Promising refunds and rewards: The IRS never promises you a refund before you file your taxes, and the amount of your refund is always based on your tax return. If a company tells you they could increase your refund by helping you file for strange tax credits or by creating your own W-2, it’s a scam.9
  • Calling instead of sending a letter: The IRS almost always contacts you in writing first. If you’re receiving threatening phone calls or haven’t received written notice of an issue with your account, it’s likely a scam.10
  • Using text or social media messaging: The IRS never texts you about issues with your tax return and they never use social media to try to reach you.11
If you notice any of these red flags, contact the IRS directly to check on the status of your tax return. Actual IRS agents are able to check your account and status to make sure you’re in good standing. If there are issues, they’re able to explain what’s going on and what steps you need to take to resolve those issues.

Tips to Avoid IRS Scams

Protecting yourself from scammers is becoming increasingly difficult, but that doesn’t mean it’s impossible. Here are a few things you could do to protect yourself from scams.12
  • STOP: Take a moment and gather your thoughts. Fraudsters want you to act quickly and out of panic.
  • Verify communication: Verify any phone numbers used to contact you by visiting IRS.gov or calling 1-800-829-1040.
  • Keep personal information private: Never share your personal information like bank account details, credit card numbers, addresses, or your Social Security numbers with anyone.
  • Stay informed on recent scam tactics: Check the news to see what scams are circulating online and be on the lookout for anything that seems suspicious.
  • Use tax professionals: When you work with an experienced tax professional, you reduce the risk of your taxes being audited or your return being delayed due to inaccurate information.
  • Know what the IRS doesn’t do: The IRS never demands immediate payments, threatens to arrest you, or contacts you by email initially.13

What if I Actually Owe the IRS?

Owing money to the IRS is more common than you might think. In 2022 alone, American taxpayers owed more than $120 million in back taxes.14 If you receive a message from someone claiming to be an IRS agent but are unsure if you owe back taxes, reach out to the IRS directly. You can call 1-800-829-1040 to speak with a representative or log into your account through the IRS’s website.If you owe money, you may be able to pay online or work with the IRS to determine a repayment plan.

What if I’ve Been Scammed?

If you’ve been scammed, the best thing to do is report it as soon as possible. The IRS has tips for reporting scams to help you report suspicious activity and messages, but here are a few quick highlights.
  • Report calls: The U.S. Treasury Inspector General for Tax Administration lets you report scam phone calls online by entering information about the incident. If possible, include the caller ID information and phone number in the report.
  • Report emails to the IRS: If you receive a suspicious email, report it to phishing@irs.gov. Usually, you’re able to forward the suspicious email as you received it to the IRS’ email address.
  • Report to the Federal Trade Commission (FTC): If you’re receiving calls for scam services like helping you reduce what you owe the IRS, report those calls to the FTC.

Final Thoughts

Tax scams may leave you feeling like you’ve done something wrong, but it’s important to remember that the IRS is there to help. If you receive a strange call or email about owing the IRS money, contact the IRS immediately to verify the information. Chances are your account is in good standing and scammers are unfortunately targeting you. Hopefully with these tips, you’re better equipped to outsmart them!
Fraud & SecurityFinancial Wellness