It’s officially tax season, and while that may mean you’re collecting and filling out all sorts of paperwork, for scammers it means millions of taxpayers they can potentially profit off of.
Here’s what you need to know about tax return scams and how you can avoid them this tax season.
How the scams play out
In a tax return scam, a fraudster steals a taxpayer’s personal information and files a fake tax return on their behalf. The scammer will direct the refund to be deposited into the taxpayer’s checking account. After the refund is deposited, the scammer will contact the victim, impersonate the IRS, and claim the refund was mistakenly inflated. They’ll instruct the victim to return the alleged extra funds via gift card or wire transfer—directly to the scammer.
In another variation of a tax return scam, a fraudster steals a taxpayer’s personal information and files a fake tax return on their behalf, as described above. However, instead of directing the refund to be deposited into the victim’s account, the scammer has the funds deposited into their own account. When the taxpayer tries to file a legitimate return, the IRS will inform them they’ve already filed one.
Unfortunately, tax return scams are relatively easy to pull off. Scammers only need to get their hands on a victim’s name, Social Security number, and date of birth. All other information, including income and employment details, can usually be fabricated.
How you can protect yourself
There are steps you can take to limit your vulnerability to tax return scams. Here’s how to keep your money and your information safe this tax season:
- File early. This gives scammers less time to use stolen or fabricated information.
- E-file with care. Only use a secure computer and a secure, reputable site to file your electronic tax return. Avoid using public Wi-Fi to file your taxes.
- Keep your previous tax returns in a secure location. Whether you store your documents in a password-protected folder on your computer or in a locked filing cabinet, be sure to secure your tax returns and shred any documents before recycling them.
- Never download links or attachments from unverified sources. These may contain malware, which can infect your computer and deliver your information right into the scammer’s hands.
- Protect your personal information. Don’t share personal information (Social Security number, birthdate, passwords, etc.) with an unknown contact over the phone or online.
It’s also important to be aware of the following to help you identify possible scams:
- Refund checks will never be deposited into a taxpayer’s account if they have not filed taxes. If a tax refund lands in your checking account and you know you haven’t yet filed taxes, you are likely the victim of a tax return scam.
- The IRS never demands payment by a specific method. If you’re asked to wire money to the “IRS” or pay by gift card, you’re likely talking to a scammer.
Received a suspicious call?
If you receive a phone call or letter from someone claiming to represent the IRS and informing you that you owe tax money, you can view any actual amounts owed by checking the IRS website. If the call is suspicious, do not provide any information to them and hang up.
If you haven’t received your tax refund within one month of filing, you can check your refund’s status on the IRS website. If the site shows that your refund was issued but you haven’t received it, follow the IRS’s steps to report tax fraud.
Stay alert this season and keep these tips in mind while you file your taxes.