Hooded hacker using a laptop to perform an IRS scam

Avoid These Sneaky 8 IRS Scams [Updated For 2020]

It seems that fraud and IRS scams have no off-season. At all times of the year, a smooth and convincing scam artist may call you and inform you of an IRS repayment due immediately or of a tax audit with your name on it.

Understandably cooperative and a bit fearful, you may then offer up any information or money to clear your record and settle any outstanding debts with the IRS. In return for your cooperation, these scammers will then use that information to give you and your relatives many hours of mass social engineering attacks, data collection attempts, and collection calls.

In this post, we will discuss some of the common attacks that are used by scammers to trick you and show you how to spot the fakes. It is obviously important to be aware of the various attacks that are used by scam artists so you can protect your personal information and your money.

1. The SSN Scam

Fake IRS phone calls are one of the most successful types of scams in 2019. In a phone scam, con artists will call you and inform you that you owe a significant amount in back taxes due to a mistake or an undeserved tax deduction. Usually, they give you two options: pay it immediately or risk going to jail.

More recently, scammers and cybercriminals are using a tactic known as the “SSN Hustle.” In this scenario, scam artists will tell you that your Social Security number has been suspended or canceled. They will demand that you pay a certain amount of “tax debt” or they’ll cancel your Social Security number.

Cybercriminals engaging in this SSN scam are hunting for personal information that can be used for identity theft or sold to other criminals. While money is a more common motivator in scams, scammers can also sell personal information to other criminals for a substantial sum.

What you need to know

  • These fraudsters will claim to be from the IRS or another government agency
  • They will threaten to cancel your Social Security number if you do not return their calls.
  • They may mention overdue taxes or threaten to freeze your assets and halt benefits.
  • If you return the call, they will ask you for personal information, starting with your social security number.
  • The scam often targets older adults, so ensure that your employees know about it and can warn their relatives.
  • Social Security numbers are never suspended or canceled.
  • Many scammers will stop calling a number if nobody picks up.

2. The Fake Tax Agency Scam

The fake tax agency scam is another variant on this, although in this case, it generally involves a mailed letter. The letter will claim to come from the Bureau of Tax Enforcement and say that you owe back taxes and will face a lien or levy if you do not pay an overdue balance with them.

What you need to know

  • There is no Bureau of Tax Enforcement. Although the letter may refer to the IRS to appear legitimate, the IRS is the only federal tax enforcement agency.
  • If you get one of these letters, you should call the IRS using the number on their official website (ending in .gov). Do not call any phone numbers that appear in the letter.
  • The IRS will not threaten to get you arrested by local law enforcement if you do not pay immediately. Nor will they threaten to deport you.
  • Sometimes, these scam letters will mention real tax debts. This information is easy to find and does not prove that the scammer knows anything about your company.
  • A proper IRS letter will have the official IRS seal, a notice or letter number at the top right-hand corner, your truncated tax I.D. number, and accurate IRS contact information.

3. Taxpayer Advocate Service Scam

Another emerging scam is the impersonation of the Taxpayer Advocate Service (TAS). Although the TAS is a legitimate organization that helps taxpayers deal with the IRS, scammers will impersonate them. They’ll even appear to have the official number.

What you need to know

  • The Taxpayer Advocate Service does not make contact with taxpayers. They wait for you to call them.
  • The spoofed numbers are the numbers of the TAS office in Houston or Brooklyn.
  • The scammers’ goal is to obtain personal information, ideally your SSN or taxpayer-identification number. This scam generally targets individuals, so warn your employees.
  • Do not return these calls. Again, the TAS will not proactively contact consumers.

4. Tax Transcript Email Scam

In these types of IRS scams, an email that appears to come from the IRS, generally with “tax transcript” in the subject line, will have an attachment labeled “Tax Account Transcript.”

The attachment contains the Emotet malware, a worm that will spread through your network if you open the infected attachment.

What you need to know

  • Tax transcripts, which are a record of your return, are never sent through email.
  • Never open unsolicited attachments, whether or not you know the sender. If you know the sender, check with them through another form of communication to verify that they sent it to you.
  • Emotet is a particularly nasty malware that will steal passwords and email addresses and requires expert removal.
  • The IRS will not contact you via email unless it’s in response to a question you had for them.

If you get this email, the IRS requests that you forward it to [email protected] so they can investigate.

5. The Fake Charity Scam

Especially after major natural disasters, scam artists will often try to trick you out of your money. These IRS scams usually have bogus websites with names similar to legitimate charities, and may even be “typosquatting” (buying a domain a character away from the actual domain).

What you need to know

  • If you or your company decides to donate to a charity in the wake of a natural disaster, make sure the charity is real.
  • Do not donate to personal GoFundMe accounts unless it’s confirmed as a legitimate account. Fake GoFundMe accounts are prevalent after natural disasters.
  • Never give or send cash. Always use a check or credit card. 
  • Avoid giving the credit card number directly to somebody soliciting money over the phone. If using your credit card online, make sure the charity’s website is secure. PayPal may also be an alternative.
  • A real charity does not need to know your social security number.
  • Double-check the IRS website to find out whether the charity exists and is registered.
  • Double-check the URL of the website before donating any money.

6. Health Coverage IRS Scams

An “official” IRS letter will arrive in the mail informing you that you are being penalized for not having health insurance for a certain number of months within a tax year. The letter will demand that you mail your payment for the missing months of coverage immediately to an address given in the letter.

What you need to know

  • The letter appears to be issued from an address in Austin, Texas.
  • A payment voucher number is listed on the letter as “105C” or a similar format.
  • Requests for payment direct you to mail it to the “IRS” at a​ P.O. Box in Austin, Texas.

7. Solicitation of W-2 Information from HR Departments Scam

This scam is one of the more brazen scams and is intended for companies and tax preparers, rather than individuals. Basically, the scam artist(s) will pretend to be a corporate official (usually one with believable reasons for requiring W-2 information) and convince the H.R. representative or tax preparer to send or divulge the federal tax information (FTI), personal information, and tax return of their clients or employees to them.

What you need to know

While larger companies typically have security teams who are aware of the latest security threats, small businesses may have a hard time staying current with the new threats and phishing strategies. For this reason, it is important to keep your employees informed and prepared for recognizing various social engineering attacks. As a company or tax preparation agency, you should report all suspected successful scam incidents to the FBI and the IRS.

8. IRS Impersonation Phone Scam

There are many variations of this scam, but the basic idea is that scammers will call or email you, posing as IRS employees, with convincing but fake names and IRS badge numbers to you. The fraudster usually requests personal information, including your Social Security number, birth date, and other sensitive information.

One convincing part of this routine is that these criminals will spoof your caller I.D., so they appear to be calling from the IRS. After giving you their phony badge number, they will harshly claim that you are guilty of tax fraud or have “miscalculated” your taxes and demand you pay immediately to avoid losing your driver’s license, being arrested, or any number of drastic actions.

What you need to know

While these emails and calls have many variations, the idea behind all of them is to make you act before you think through what is happening in the email or call. Remember to think carefully before doing anything on a suspicious call.

How To Know When It’s Really The IRS 

  • The IRS will always contact you by mail. Learn more on the IRS website.
  • The IRS will instruct you to make payments to the US Treasury. Find more info about payments on the IRS website.
  • While the IRS may arrive at your house unannounced, they may not demand immediate payment from you
    • If they do assign a private collection agency to your case, they will give you written notice​ if one is even assigned to your case. Legitimate debt collection efforts will never demand payment on a prepaid card or gift card, but will always direct you to pay the U.S. Treasury, not the agency. You can learn more about IRS debt collection practices here.
  • IRS auditors may call to set up a meeting with you, but you will have been notified in writing beforehand of the audit. Visit the IRS website to learn more about auditors.
  • For legitimate criminal investigations, the investigator may unexpectedly arrive at your home, but will never demand payment. For more information about IRS investigations, learn about what occurs in an IRS investigation and the initial stages.
  • Visit the IRS website for a more comprehensive list of IRS consumer tax scams.

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