Yahoo Finance Tech-enabled tax scams are more common than you think – here's how to avoid them
As we're coming down to the wire on tax season, it's easy to forget that tax-filing time is also prime time for scammers. In 2022, the Internal Revenue Service (IRS) pinpointed more than $5.7 billion in tax fraud. Add to that the fact that 92% of tax returns are filed electronically, and that makes tax season particularly vulnerable for consumers.
Yahoo Finance spoke to Zulfikar Ramzan, chief scientist at consumer cybersecurity app Aura, about what the most common tech-centric scams look like — and how to avoid them.
"Criminals prey on the stress of paying taxes or talking to the IRS to steal sensitive information and file fraudulent tax returns. And the problem is only getting worse," he said. "Tax season is lucrative for scammers because few of us have experience dealing directly with the IRS. And once they have your information, it opens the door to other types of fraud and even identity theft."
Common tech-enabled tax scams
First thing to look out for — be wary of emails that purport to be from the IRS.
"Phishing emails asking you to verify your information are one of the most common tech-enabled tax scams," said Ramzan. "Scammers will send you an email pretending to be from the IRS, often with threatening or urgent subject lines demanding payment, leading you to a page that looks like the IRS website, but is a hoax."
The same goes for phone calls.
"Phone calls demanding money are another common tech-enabled tax scam," Ramzan told Yahoo Finance. "Scammers use bots and robocallers to send thousands of calls at once pretending to be from the IRS. When you answer, they’ll say you owe taxes, demand payment immediately, and may threaten your arrest if you don't pay."
Additionally, tax returns under your name – that you didn't file – are another frequently-seen scam that's growing in popularity.
"Tax identity theft occurs when, without your knowledge, someone submits a tax filing under your name," said Ramzan. "Surprisingly, this doesn't require any tax documents — all it requires is your name, Social Security number, and date of birth. The fraudulent return will show a large refund, which the thief will deposit. When you go to file your taxes, you'll get an alert from the IRS that someone else has already filed as you. While you're still legally eligible for your refund, the process to confirm your identity is complicated and the thief has your personal information."
So, what should you do?
A huge part of keeping your identity and information safe is a matter of awareness and double-checking. For example, don't give your tax information to anyone other than the tax preparer you're working with. Check who your emails are actually from by hovering over the name of the sender.
"Scammers will often change their names to look like they are from the IRS or another agency, but if you hover over or click on the name, it will reveal their actual email. If it’s not from a .gov address, it’s a scam," said Ramzan, adding that the same is true for phone calls since caller ID can be faked.
Also, an important PSA on Social Security numbers: "If someone is claiming that your Social Security number has been or will be suspended, hang up, delete the email, and ignore the scam," Ramzan told Yahoo Finance. "Your Social Security number can't be suspended, canceled, frozen, or revoked."
Ultimately, it's unlikely the IRS would try to find you, but if they do, the agency prefers snail mail, per its website. So, that email that looks like it's from the IRS? It's probably fraud.
"If an email is requesting additional tax forms, ignore the message and report the fraud to the IRS," said Ramzan. "The IRS won’t contact you by email, so any request for forms like this is an example of fraud."
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.
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