Watch Out for These 3 Tax Season Scams

As millions of U.S. taxpayers prepare to file their federal income tax returns, scammers are preparing to steal their personal information. Cases of tax-related fraud jumped by 225% from 2019 to 2020, and the rate may increase this year. Data from the FTC Consumer Sentinel Network Data Book 2020 ranks tax-related fraud as the fifth leading type of identity theft in the country. While it’s not the most prevalent form of identity theft, it is significant. And taxpayers need to remain vigilant to protect themselves from these scams.

What Is a Tax Season Scam?

A tax season scam occurs when someone else uses your personal information to file a tax return in your name, claim benefits using your personal data, or steal your tax refund.

Tax Season Scams

While tax season scams can occur at any time, they typically increase between February and April each year. Here are three scams that you might encounter during the 2021 tax filing season:

• Social Security Number (SSN) Suspension Scam. Criminals often use robocalls to deliver threatening messages. They claim the taxpayer must immediately use gift cards, prepaid debit cards, or wire transfer to make an immediate payment on overdue taxes. Some scammers will state the taxpayer will be arrested if they don’t comply. If the taxpayer fails to take immediate action, the caller falsely claims that the IRS will cancel their SSN.
• Taxpayer Advocate Service Phone Scam. The Taxpayer Advocate Service (TAS) is a real agency associated with the IRS. But calls coming from their Brooklyn, NY and Houston, TX locations may be fake. This IRS impersonation scam spoofs the phone number for robocalls and urges the taxpayer to call the number back to resolve an issue. Believing that they’ve reached a legitimate federal agency, the taxpayer unknowingly provides personal information to a scammer.
• Unemployment Compensation Scam. If a taxpayer received IRS Form 1099-G (Unemployment Compensation) but didn’t receive unemployment benefits, they are likely a victim of identity theft. Thieves used the pandemic as an opportunity to file fraudulent unemployment compensation claims, using stolen personal data. The victim only learns of the fraud when they receive IRS Form 1099-G, which is issued because unemployment benefits are taxable income.

How to Protect Yourself from Tax Season Scams

Avoiding these scams is possible by knowing how the IRS communicates with taxpayers.

• The IRS initiates communication by sending written notices through the postal service. They do not start conversations with taxpayers via text, unsolicited emails, social media, or phone calls.
• The IRS does not accept or demand tax payments using non-traceable means, such as prepaid debit cards or gift cards.
• The IRS does not threaten to have you arrested, revoke your immigration status, cancel your Social Security Number, or suspend your driver’s license for not paying a tax debt.

When you need to communicate with the IRS, always call them using the phone number on their official website. Do not return a call left on your voicemail. It’s probably a scam.