Doing your taxes isn’t the most fun, but it could be extra painful if you fall victim to a tax scam. Tax season is a time when a lot of money is on the move, making it prime hunting for scammers trying to get their hands on a piece of the proverbial pie. While a variety of tax-related scams have existed for years, they constantly evolve in order to stay fresh and keep their victims out of the loop. That’s why every year the IRS provides a report they call “The Dirty Dozen,” documenting the 12 most currently pervasive scams to watch out for when it comes time to do your taxes.
Taxes don’t need to be any more of a strain than they already are, so here are some of the most common tax scams you’ll want to be on the lookout for this tax season.
Phishing and Smishing Tax Scams
If you’ve only ever heard of one type of scam, it’s most likely phishing. Phishing scams are by far the most common type of scam, with an estimated 3.4 billion phishing emails being sent out every day. More recently, scammers have added a variation to classic phishing scams known as “smishing” (SMS phishing — AKA text phishing), where they send the same messages and fake links, but via text instead of email. While these two scams certainly aren’t new, they still prove to be extremely effective for scammers.
Phishing and smishing tax scams are conducted by sending out emails and text messages claiming to be from the IRS. The content of the message will often be around some urgent notice, such as an unclaimed refund, an outstanding balance, or some kind of account hold. These are all bogus, of course, and are all trying to lure you into clicking a link within the message that takes you to a fake website or prompts a malware download.
Social Media Tax “Advice” Scams
With the rise of social media (and particularly TikTok in this case), more people are getting “hot tips” for things varying from diet to fitness to…well, taxes. What makes this a particularly interesting addition to the list of things to look out for when doing your taxes is that only a small portion of supposed TikTok tax gurus are actually scammers trying to steal your identity or money.
So, what are they after? Views, clicks, and just engagement in general. By simply providing “tax hacks,” content creators can generate viral videos that lead to plenty of money via ads or sponsorships. Remember, just because you’re getting a “tax tip” for free, don’t assume it won’t result in negative consequences. A real-life example of this is a series of viral tax videos about how to use — or rather misuse — Form W-2 and Form 8944 for some supposed benefit. While the videos talk about how you can get all kinds of credits or refunds, the reality is you’re actually committing tax fraud, and the IRS isn’t one to let that slide.
While engagement farming for revenue is a newer quasi-scam, old-school scammers still use social media content to steal money and identities. This is most commonly found with people claiming to be tax experts, offering a service, software, or crash course that supposedly saves you money on taxes. Best case, you end up paying for a PDF booklet with publicly available information. Worst case, you give up your sensitive financial and social security information to a scammer.
Taxes can be complicated, and it’s not a bad idea to seek the help of a professional…so long as that person is actually a professional, not just somebody pretending to be one on social media.
Fake Tax Helper Scams
Semi-related to the above scams dealing with social media, fake tax helpers predate those scammers and have long offered tax assistance services that are just fronts to steal your money and/or identity. These scams vary in the supposed assistance they offer — some claim to do your taxes for you, but are actually interested in stealing all the private information you give them. Others, known as “ghost preparers,” will actually submit fraudulent returns in your name to get big refunds and then disappear with the money while you deal with the consequences.
Once again, the only people you should trust with your tax information are reputable professionals, as anyone offering loopholes or tricks is most likely a scammer.
Fake Charity Scams
Fake charities are another type of scam that frequently pop up, particularly around a tragedy or natural disaster. These fake organizations will pretend to fundraise for a good cause, when in fact they are doing what every scammer does, steal money and private personal information.
This is relevant to taxes because taxpayers who donate to charity are often able to claim a deduction on their federal tax return. The problem is that donations only count when they go to a qualified tax-exempt organization acknowledged by the IRS. That means not only is your money gone, but so is your ability to claim it for a deduction.
While it’s a shame scammers use people’s generosity for gain, when it comes to charities, always double-check not just the validity of the charity, but also that you’re not interacting with scammers pretending to be a legitimate charity.
Offer in Compromise (OIC) Tax Scam Calls
The Offer in Compromise (OIC) is a very real program offered by the IRS to help people settle tax debts for less than the full amount to be collected in a reasonable period of time. The issue that arises with scammers is through what the IRS refers to as OIC “mills,” which are actually scammers heavily marketing fake promises of getting out of debt through paid services. They will often call victims, claiming they can get you out of tax debt if you pay them a fee. Unfortunately, the fee is often excessive, you don’t actually get out of all your debt, and the reality is that the OIC program is made so anybody that qualifies can easily do it themselves for free.
New Client Spear Phishing Scams
Spear phishing is a special type of phishing that specifically targets certain professionals, often within bigger businesses. Because tax professionals hold the private financial details of all their clients, they have become a featured target of spear phishing. Here, scammers will impersonate new clients, sending links that actually compromise the tax preparer’s computer system, giving the attacker access to sensitive client information.
If you’re a tax professional or work at a large business that holds valuable information, always be on the lookout for suspicious interactions, and double-check links before clicking.
Taxes Filed, Scams Avoided
While it shouldn’t be too hard to find a qualified tax professional or service provider, it doesn’t hurt to know who you’re dealing with when it comes to handing over your valuable private information.
Before working on your taxes with someone off the internet, run a search through Spokeo’s People Search Tool, which can help verify information and alert you to any red flags, such as previous criminal activity relating to financial fraud or crimes (additional fees may apply to search criminal records).
Cyrus Grant is a writer from Southern California with a background in law and dispute resolution. When he isn’t writing he can be found deep-diving into the latest technology trends or simply spending time at the beach.