Hooded hacker using a laptop to perform an IRS scam, part of dirty dozen list of IRS scams.

Dirty Dozen: Overview Of IRS Scams & Tax Scams In 2022

“Hello, this is the IRS calling you to let you know that you will be arrested if you do not pay your balance due in the amount of $1,500,” says the voicemail. Like many taxpayers, you immediately call them back and end up sending them a prepaid debit card to take care of your balance. There’s just one problem: That entire call was an IRS scam from someone posing as an official IRS agent. 

As noted in IR-2019-28, the IRS will never call to demand payment with a specific method like a prepaid card or gift card, and will always contact you by mail first about any taxes owed. Still, many IRS scams sound legitimate and can fool you if you aren’t aware of the top tax scams happening around you. 

What is an IRS scam?

Quite simply, an IRS scam is when a criminal impersonates an IRS agent to steal Social Security numbers (SSNs), electronic tax filing ID numbers, bank account numbers, and other sensitive information. 

Tax scammers then use this information to conduct mass social engineering attacks, phishing attacks, data theft, and other crimes against those connected to you.

The best way to avoid falling for an IRS scam is to educate yourself on the tactics and methods criminals are using to steal people’s information. This way, when a smooth-talking criminal contacts you, you’re prepared to handle it without compromising your information.

IRS phone scams: How to respond to collection calls from fake IRS agents

This is one of the most well-known, but also most effective, IRS scam tactics. In an IRS phone scam, a criminal will call you and leave voicemails, requesting you to call back and deal with an outstanding balance. 

“Return your erroneous tax refund to us”

In this scheme, criminals will call and say a tax refund was made in error and that you must return it to their collection or be arrested. Sometimes, criminals can really deposit a refund in your bank account by stealing your banking information from tax professionals who aren’t vigilant about data security. This is why it’s important to choose a good tax preparer. 

“Call us or you will be arrested”

An IRS imposter or automated call may also tell you to call back and pay your overdue taxes or you will be arrested and your Social Security Number will be blacklisted. To appear more credible, IRS imposters may include fake badge numbers and arrest warrant numbers or spoof their caller ID to make it seem like the IRS is really calling you.

“Your SSN has been canceled until you pay the taxes owed”

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 use your information in more lucrative scams or sell the information to other criminals. Keep in mind that your SSN cannot be canceled or suspended, especially for not returning calls.

“You miscalculated your deductions and owe us” tax scam

 In this scam, IRS imposters call you and provide 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.

It’s important to remember that the IRS will never:

  • Threaten to have you arrested for not paying your taxes.
  • Demand that you pay without offering the chance to question or appeal the amount
  • Ask for credit or debit card numbers over the phone
  • Insist that you pay with gift cards, prepaid cards, or 
  • Contact you to tell you about an unexpected refund

IRS email scams: How to avoid phishing emails from IRS imposters

Along with phone calls, scammers also use IRS email scams to trick hard-working taxpayers like you into providing tax information or other private information. As with IRS phone scams, there are many different IRS email scams that criminals can use to trick you.

Impersonating trusted contacts so you lower your guard

We’re less likely to question an email from a friend, family member, or colleague so criminals often use stolen data from other phishing schemes to impersonate trusted contacts or hack into their accounts – this is why you should use different passwords for each account.

It’s best to avoid clicking links in emails that you didn’t request. You should also confirm that the email is legitimate by contacting the sender using a different medium.

Solicitation of W-2 Information from HR Departments Scam

This tax scam is a business email compromise (BEC), which means it’s intended for companies and tax preparers, not 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 email or divulge the federal tax information (FTI), personal information, and tax return of their clients or employees to them.

The IRS email scam that asks you to download tax transcripts

IRS imposters can hide computer viruses and spyware programs in files, then attach those to emails. If you download these files, criminals can track your keystrokes to steal passwords and credit card numbers or lock your device to demand a ransom. 

One particularly nasty IRS scam is the Emotet email scam, in which an email appears to come from the IRS with “tax transcript” in the subject line. The email will have an attachment labeled “Tax Account Transcript.” When you click and download this attachment, the Emotet malware will infect your computer and spread through your network, stealing your passwords and other sensitive information. The Emotet malware can be very challenging to remove from a device and requires expert assistance.

Here are some key points to keep in mind:

  • 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.
  • The IRS will not contact you via email unless it’s in response to a question you had for them.

Using misspellings of trusted company website domains to trick you

IRS scammers will often create email addresses that resemble trusted companies or charity organizations, known as typosquatting, to trick you into clicking links or downloading files. For example, you may get an email from support[at]gooogle[dot]com asking you to confirm your login details. It’s best to confirm that the domain (the website listed after the @ symbol) is the official email address before you respond.

Posing as a new client during the COVID-19 pandemic in 2021

Accounting and tax firms are prime targets for scammers and data thieves because they have trusted access to the financial information of their clients. In 2021, the IRS warned tax professionals of a clever phishing attempt where a scammer poses as a new client. 

After emailing a tax professional a few questions about working with them, the criminal emails a malicious file to the tax professional entitled “tax transcript” and asks the professional to open it. After the accountant or tax professional clicks on the file, malware would discreetly download in the background and infect the computer, putting the information of both the professional and their clients in danger. 

Pretending to be a charity organization

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. Here are some other considerations:

  • 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. Often, scammers buy domains that are misspellings of trusted charities or companies (like the gooogle[dot]com example). 

Tax return scams: How to avoid dishonest professionals and “ghost preparers”

If a tax preparer refuses to sign you tax return, find another tax preparer immediately. All tax professionals are required to sign the returns they prepare for clients as a measure of accountability and transparency about their work. If a tax preparer refuses to sign, you should question the work theyve done on your tax return. Why are they afraid to put their name on their work? One of the best ways to protect yourself from tax scams is to avoid hiring a dishonest tax preparer.

Related Reading:  Hiring a tax professional? How to pick the best one. 

IRS letter scams: When criminals mail you fake IRS letters

Most of the time, cybercriminals contact you by phone or email when they’re trying to scam you. But brazen scammers can occasionally mail you a fake letter from the IRS, in which they’ll either notify you of a refund or an overpayment and give you a phone number to call and provide banking information.

Fake IRS letters from The Bureau Of Tax Enforcement

The fake tax agency scam is another variant of 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. Here is what you should 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 the official IRS 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 that matches what is listed on the official IRS website (irs.gov).

“This is the Taxpayer Advocate Service” IRS scam letter

Data thieves can also impersonate the Taxpayer Advocate Service (TAS) to trick you into disclosing personal information. Although the TAS is a legitimate organization that helps taxpayers deal with the IRS, scammers will impersonate them and even appear to have the official TAS number on the letters they send you. 

Here’s what you should know about this IRS scam:

  • 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 elderly individuals, so warn your employees.
  • Do not return these calls. Again, the TAS will not proactively contact consumers.

The “missing health coverage” IRS scam letter

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.

Here’s what you should know about this IRS scam:

  • 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.

How To Know When It’s Really The IRS 

  • The IRS will always contact you by mail.
  • The IRS will instruct you to make payments to the US Treasury through a same-day wire, mailed check or money order, cash (through specific retail locations and partners), or ETF withdrawal while e-filing your return
  • While the IRS may arrive at your house unannounced, they will not demand immediate payment from you
  • 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.

While unlikely, if IRS does assign a private collection agency to your case, they will give you written notice​. 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.

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