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Avoid These 2024 Tax & IRS Scams & Fraud Schemes

Tax season is here, and with it comes an increase in activity by all kinds of thieves, conmen, and fraudsters—all looking to take advantage of taxpayers scrambling to complete their federal income tax returns.

These folks are all experts at taking advantage of the anxiety that often surrounds completing a tax return and complying with Internal Revenue Service (IRS) requirements, bombarding taxpayers with a dizzying array of innocuous requests, threats, and confusing offers.

And, while tax season presents a particularly rich target for criminals, you can still be targeted at any time of year. Typically, you’ll receive a communication via mail, email, text, or phone that seems to know just enough about you to be plausible. It takes vigilance to know when to discard the letter, click the trash button, or hang up the phone.

Below we take a look at 12 of the most common recent scams identified by the IRS, and how you can spot and avoid them.

1. “Ghost” Tax Return Preparer

Fraudsters emerge from January onwards to take advantage of desperate tax filers seeking help with their return as April 15 looms. Scammers pose as tax preparation experts and then manipulate your income and deduction to fabricate a larger refund. They then pocket a hefty preparation fee and leave you to face the music.

Official tax preparers are required to sign every return they prepare. If your preparer is reluctant to do this, be very suspicious. Be wary of “experts” offering to help with taxes outside grocery stores or in makeshift premises. Remember, you are ultimately responsible for the accuracy of your tax return and will face the consequences of any inaccuracies or fraudulent statements.

2. Fake or Doctored W-2 Forms

Another filing season favorite involves scammers who tempt desperate or naive tax filers to fabricate, doctor, or falsify the income and deduction information contained in the W-2 form supplied by their employer.

Be wary of anyone who claims you are entitled to any additional income or tax benefits other than those described on your W-2. Falsifying your W-2 requires you to collude with a criminal, but you will likely be left to bear the long-term legal and financial consequences.

3. Employee Retention Credit Scams

Small business owners are particularly at risk of scammers who claim they can help their business apply for the Employee Retention Credit, which rewards businesses for keeping staff on their payrolls during the COVID-19 pandemic.

Applications for this tax credit are complex and have been overwhelmingly fraudulent. Criminals have defrauded businesses by charging exorbitant “consultant fees” or even claiming a portion of the credit and have often left businesses out of pocket or with outstanding legal fees.

4. Unclaimed Refund Scam

This common year-round scam involves letters or emails bearing counterfeit IRS letters or logos that claim you are owed a large tax refund. The mailings typically require you to reveal your personal information or banking details. Sometimes they even demand money to claim a non-existent “refund.”

Be wary of any communication that asks for personal information or banking details. No government agency or reputable business will do this.

5. IRS Impersonation Scams

Similar but more threatening are telephone calls, letters, or emails from criminals pretending to be IRS agents or state taxation officials. Often these callers claim to require taxpayers’ social security or tax identification numbers to verify taxes or unlock a “suspended” account.

Other times, however, fraudsters demand immediate payment of supposed debts or back taxes via untraceable methods such as wire transfers or gift card numbers and may even threaten their victims with arrest, deportation, or fines.

6. Tax Transcript Scams

A more innocuous threat comes from fake tax transcripts that are distributed via email by criminals posing as the IRS. The transcript files contain viruses or malware that can steal your personal information, encrypt your files, or hijack your computer unless you pay a ransom.

7. Pandemic Aid and Disaster Response Scams

These are emails or paper mail that look like official communications from government agencies (including the IRS), that offer grants, tax credits or refunds, or loans as part of the ongoing response to the COVID-19 pandemic. The mailings demand access to financial records, personal information, or health records that can be used to defraud you or steal your identity.

Similar mailings also occur in areas of the U.S. that have recently suffered damage from major natural disasters such as flooding, earthquakes, tornadoes, or hurricanes. The messaging will state that to qualify for non-existent state or federal aid, your response must be quick.

8. Scams Targeting Schools

Sophisticated fraudsters sometimes target groups of people attending the same educational institute by sending fake messages to large numbers of emails with the same “.edu” suffix. These messages claim to be from the IRS or educational authorities and attempt to gain personal information by offering education-related tax refunds or loans.

9. Charity Fraud

A related scam takes advantage of people’s goodwill by sending requests for donations in the wake of a major disaster—often in the name of recognizable charities or aid agencies—that ask people to disclose information about their donations for tax purposes.

Fraudsters also take advantage of the trust people place in their religious organizations by sending convincing emails that seem to come from senior leaders, but in reality, are scams. These emails typically ask you to make a donation or provide private information related to past donations.

10. Unemployment Benefits Scams

This is a brazen form of identity theft where fraudsters can steal enough personal information to file a FORM 1099-G form for unemployment benefits in your name. This type of scam became common during the COVID-19 pandemic when huge numbers of people became eligible for benefits during a short window of time.

The money is then sent to accounts controlled by the criminals while you are left to deal with the tax implications and other consequences of “receiving” benefits you did not apply for.

11. Offer in Compromise Scams

The IRS works with taxpayers to settle outstanding tax debts through their Offer in Compromise Program (OIC). Unfortunately, criminals have set up elaborate operations that target taxpayers in difficult situations, offering to resolve their outstanding debts in return for a relatively small payment. These schemes leave taxpayers even more out of pocket and still in debt to the IRS.

12. Investment Tax Benefit Scams

Scammers contact potential victims via mail, email, or phone offering investments that offer significant or unrealistic tax benefits, often involving complex corporate structures or offshore investments. In the best-case outcome, you could be sold a product with little or no tax benefits. In the worst, you could lose a lot of money and still face significant real tax penalties.

How to Spot a Tax Scam

Fraudulent emails and letters impersonating genuine communications from the IRS, government agencies, financial institutions, or charities are increasingly convincing and difficult to spot.

But remember that:

  • The IRS initiates contact by mail only, never via unsolicited phone calls or emails
  • The IRS will not ask for personal or financial information in emails or phone calls
  • The IRS does not demand payments via wire transfer or gift cards
  • You can request and verify the badge number of any IRS agent who contacts you
  • Tax preparers need to sign every return they help to complete
  • Be wary of any tax-related service asking for payment upfront
  • Agents or consultants offering to help with your tax return should not ask for a share of your refund
  • You should never click on links or download files attached to an email unless you are certain of its source

You can report suspected tax fraud and “ghost” preparers here.

Are You Ready for Tax Season?

If you met IRS reporting thresholds for 2023, your Freedom Credit Union tax statements were mailed in January and are your official tax documents.

To access your tax statement in our online banking portal, select “Documents” under the expandable menu in the top right corner of the screen. In the Freedom CU mobile app, select the “More” menu on the bottom right corner, then select “Statements.”

As your local member-owned Philadelphia-area credit union, Freedom CU is here to answer any of your tax-related questions. If you feel that you have been a victim of fraud contact our Loss Prevention Department at (215) 612-5978.