Protect Yourself From Tax Scams This Season

As tax season approaches, it’s a busy time not only for taxpayers but also for fraudsters. Cybercriminals are getting more sophisticated, targeting wealthy individuals and anyone who might let their guard down. Protecting your personal and financial information is more critical than ever. 

In 2024, the FBI’s Internet Crime Complaint Center (IC3) reported 859,532 complaints of cybercrime, with losses exceeding $16.6 billion — a record high. While not all these crimes were related to taxes, they highlight the growing scale of online fraud.

vestment fraud alone accounted for $6.57 billion in losses — the single largest category of cybercrime loss reported to IC3. Alarmingly, scammers are using new tools like artificial intelligence (AI) to create more convincing schemes, targeting taxpayers with large tax bills by offering fraudulent “relief” in exchange for sensitive information. 

The Most Common Tax Scams 

Fraudsters are constantly evolving their tactics, but a few scams remain perennial threats: 

1. Phishing Emails and Calls: 

Phishing remains one of the most widespread tactics. Cybercriminals pose as IRS officials to trick people into sharing personal information. They might claim you owe back taxes or that you’re eligible for a significant refund. Be aware of the following warning signs: 

How Does the IRS Actually Contact Taxpayers?

Understanding how the IRS communicates is one of the most effective ways to spot a scam. Here is how the IRS will — and won’t — reach out to you:

• The IRS generally does not contact taxpayers by phone or email without first sending an official letter through regular U.S. mail delivered by the U.S. Postal Service. They will email you only with your permission. Phone calls are sometimes made to discuss your case, verify information or set up a meeting.
• Scammers pressure you to “pay now or else” with threats of arrest or deportation. The IRS neither engages in these pressure tactics nor threatens to call law enforcement or immigration officials.
• Emails or texts with links to fake websites often contain spelling errors or unusual URLs—but contain dangerous links that can compromise or damage your computer and/or steal sensitive personal information. 

Remember: If it sounds too good to be true, it probably is. 

2. Unqualified or Fraudulent Tax Preparers: 

While most tax professionals are legitimate, an increasing number of unqualified preparers seek to misuse client information. To protect yourself: 

• Make sure your tax preparer has a valid Preparer Tax Identification Number (PTIN).
• Look for additional certifications such as Certified Public Accountant (CPA) or Enrolled Agent (EA).
• Avoid preparers who promise large refunds without thoroughly reviewing your financial situation.
• Never sign a blank or incomplete return.
• Ask about your preparer’s data security measures to safeguard your personal information. 

3. Tax Identity Theft: 

In tax identity theft, criminals use stolen personal information to file fraudulent returns and claim refunds in your name. Common red flags include the following: 

• Receiving unexpected tax documents or IRS notices about unfiled returns.
• Spotting emails or texts with misspelled or suspicious website links.
• Discovering unauthorized tax refunds in your name.
• Attempting to reach you directly through social media. Remember, although the IRS maintains informational social media sites, it will not contact you or take payment on those sites. 

Scammers often create convincing fake websites to steal sensitive information, so double-check that you’re on the official IRS.gov site before entering any personal details. 

4. Emerging Artificial Intelligence (AI) Threats: 

The rise of AI has made tax fraud more sophisticated. Criminals use AI to create deepfake identities and manipulate data, making scams harder to detect. 

However, AI also works in taxpayers’ favor. The IRS is using AI tools to uncover hidden assets, tax evasion and fraud schemes more efficiently. 

Steps to Protect Yourself 

The good news is there are four practical steps you can take to minimize your risk of falling victim to tax scams: 

1. Safeguard Your Personal Information 

Store sensitive documents securely and only share personal information with trusted individuals or institutions. Another best practice is to regularly monitor your financial accounts and credit reports for unauthorized activity. 

2. Recognize and Report Scams

Be cautious of unsolicited communication (by phone, text or email in particular) requesting your personal information. Report suspicious activity to the IRS and the FBI’s IC3. If you’re a victim of identity theft, notify your financial advisor, bank and credit card companies immediately. 

3. Use IRS Resources

The IRS offers tools to help you stay safe, including: 

• Identity Protection PIN (IP PIN): This six-digit number adds an extra layer of security to your tax filings.
• Tax Scam Updates: Visit the IRS Dirty Dozen page for the latest information on known scams and prevention tips. 

4. Follow FTC Guidance 

The Federal Trade Commission (FTC) provides comprehensive resources on tax identity theft. Staying informed and using these tools can help protect your wealth from cybercriminals. 

The Bottom Line 

Tax season can be stressful enough without the added threat of scams. By staying vigilant, verifying who you’re working with, and using the resources available, you can protect yourself and your financial well-being. 

When in doubt, consult trusted professionals or contact the IRS directly. It’s better to double-check than to fall victim to a scam that could have lasting consequences. 

Frequently Asked Questions About Tax Scams

1. How does the IRS actually contact taxpayers? 

The IRS primarily contacts taxpayers through official letters sent by U.S. mail. They will not email you without your prior permission, and they will not call you without first sending written correspondence. The IRS will never demand immediate payment by phone, threaten arrest or deportation, or ask for payment via gift cards or wire transfers. If you receive a suspicious call or email claiming to be from the IRS, do not engage — contact the IRS directly at IRS.gov to verify. 

2. What is an IRS Identity Protection PIN (IP PIN), and how do I get one? 

An IP PIN is a six-digit number assigned by the IRS that prevents someone else from filing a tax return using your Social Security number. Once enrolled, the IP PIN must be included on your federal tax return each year. You can apply for an IP PIN online through the IRS’s Get an IP PIN tool at IRS.gov. Enrollment is free and open to all taxpayers — not just identity theft victims. 

3. How do I report a tax scam? 

If you receive a suspicious email, call, or text claiming to be from the IRS, report it immediately. Phishing emails can be forwarded to [EmailAddress2]. You can also report tax scams to the IRS at IRS.gov/complaint or to the Federal Trade Commission (FTC) at ReportFraud.ftc.gov. If you are a victim of tax identity theft, file an IRS Identity Theft Affidavit (Form 14039) and notify your financial advisor, bank, and credit card companies. 

4. What makes AI-powered tax scams more dangerous than traditional phishing? 

AI enables scammers to generate highly convincing deepfake voices, personalized phishing emails, and realistic fake websites that are far harder to detect than traditional scams. AI tools can mimic a specific person’s voice or writing style, making fraudulent calls or messages appear to come from a trusted source — such as your accountant or financial advisor. The best defense is to independently verify any unexpected communication through a known, confirmed contact method before sharing any personal or financial information. 

5. How do I verify that my tax preparer is legitimate? 

Ask your tax preparer for their Preparer Tax Identification Number (PTIN), which is required by the IRS for anyone paid to prepare federal tax returns. You can verify a preparer’s credentials through the IRS Directory of Federal Tax Return Preparers at IRS.gov. Look for additional credentials such as CPA (Certified Public Accountant) or EA (Enrolled Agent), and never sign a blank or incomplete return. Be wary of any preparer who guarantees a large refund before reviewing your financial situation. 

6. What should I do if I think I’m a victim of tax identity theft? 

Act immediately. File an IRS Identity Theft Affidavit (Form 14039) with the IRS. Continue to file your tax return — either electronically or by paper — even if you cannot e-file due to a duplicate return. Contact the three major credit bureaus (Equifax, Experian, and TransUnion) to place a fraud alert or credit freeze on your accounts. Notify your bank, credit card companies, and financial advisor. The FTC’s IdentityTheft.gov is a step-by-step resource for identity theft recovery. 

7. Where can I find the IRS’s current list of active tax scams? 

The IRS publishes its annual “Dirty Dozen” list of the most common tax scams at irs.gov/newsroom/dirty-dozen. This list is updated each tax season and covers current phishing schemes, fraudulent preparers, abusive tax shelters, and other emerging threats. Bookmark this page and check it at the start of every tax season. 

See the whole article in Pioneer Press.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. 

By Bruce Helmer and Peg Webb, Financial Advisors at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO AM 830 on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor and affiliate of Wealth Enhancement Group. 

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