Common Tax Scams and How to Avoid Them

common tax scams
The tax season has arrived and so have the tax scams. Companies, organizations, and individuals, are preparing and filing taxes as required by the law. However, as these legitimate activities are taking place, cybercriminals are also getting ready to exploit the situation.

During tax season, scammers devise various schemes to trick people and businesses out of money in addition to stealing sensitive information.

Hackers make use of fake email, websites, and social media pages in phishing attacks to deceive taxpayers by posing as representatives of IRS or tax-related agencies.

Common Tax Scams

It is important to know how tax scams are perpetrated so you can protect yourself and your business. The following are common ways tax scammers defraud their victims.

1. Owed Taxes
This scam involves informing the target they owe a certain amount of money to the IRS which must be paid immediately or they risk serious legal and financial penalties. Cybercriminals send unsolicited messages to victims via email or text pretending to be from the IRS and related law enforcement agencies. Victims may also be targeted over a phone call.

Scammers may also request for credit card numbers to be used to clear the alleged debt. Gift cards, wire transfers, and other payment methods may be offered as alternatives.

2. Fake Tax Filing Update
Another scheme used by scammers is a request for tax filing updates.

A link is included in the email or text messages which leads to a fake website operated by the attacker. All information entered on the same website is sent to the attacker and can be used for further compromise. Scammers may apply for new accounts or loans using stolen information.

3. Locked or Restricted Tax Return
Victims may receive email, text, or call informing them that their tax account has been locked or restricted for a bogus violation. Scammers may pre-record messages to their victims who are then asked to submit their personal data in order to unlock their tax account.

4. Refund Notification
This scheme involves informing victims that they are eligible for a tax refund from the IRS. In order to claim the return, they are required to submit their personal data, pay a certain amount of processing fee or provide proof of identity.

5. Phony Tax Deduction
Hackers gain the attention of their victims by claiming in an email that a certain amount has been deducted from the target’s accounts. A malicious attachment is sent along with the email as a receipt for the deduction.

The agitated target may then be forced to rectify the situation by complying with the scammer’s request and downloading the attachment.

6. Identity Theft and Unemployment Fraud
Organized criminal gangs use data stolen via fishing to file fraudulent unemployment claims and tax returns on behalf of victims.

The victims are not aware of this until tax season when they see details of the unemployment benefits they never collected on their 1099-G tax form.

These benefits are taxable income and can cause financial loss to the person involved.

How to Stay Safe During Tax Season

Tax scam methods evolve with time. But there are some tips that can help protect your business from becoming another victim of tax scams. They include the following:

1. Ignore Request for Personal Information
The IRS will never request personal information via text message, phone calls, or email. IRS preferred method of communicating with taxpayers is through regular mail delivered by the US Postal Service.

2. Don’t Click Email or Text Links
It is quite easy for scammers to clone genuine websites and trick unsuspecting victims into divulging their personal information via such webpage.
For this reason, you should avoid clicking on links in email or text messages. Always manually type the target web address into your browser to confirm any tax issues.

3. Ignore Requests for Financial and Bank information
Any email or text messages asking for your credit or debit card numbers or requesting that you pay tax fines or dues via third-party services is definitely fraudulent and should be ignored.

4. Watch out for Generic Email Greetings
This tip also applies to general phishing. Any email address with generic salutations such as Dear Sir/Ma instead of your real name should be treated as suspicious.

5. Ignore Aggressive Tactics
Scammers use the fear factor a lot. Any supposed IRS agent that is demanding that you make immediate payment or give up your personal information under the threat of arrest or imprisonment is fake.

6. Report Suspicious Emails
The IRS has a dedicated email address for reporting suspicious tax-related emails so that they can be investigated. Whenever you encounter any fraudulent email impersonating the IRS You should forward any fraudulent email to


Tax fraud is more prevalent during tax season because attackers can easily blend in with legitimate communications and requests. Be careful of any tax-related messages, emails, or phone calls you receive.

Follow the tips discussed in this article to identify fraudulent requests so as to block and report them to the appropriate agency for necessary action.

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