From the Internal Revenue Service (IRS) —
Thousands of people have lost millions of dollars and their personal information to tax scams. Scammers use the regular mail, telephone and email to set up individuals, businesses, payroll and tax professionals.
The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. Know the telltale signs of a scam and how to know if it’s really the IRS.
Scams targeting taxpayers
Tax scams lead to inflated refund claims
The IRS warns taxpayers not to fall for these scams centered around the Fuel Tax Credit, the Sick and Family Leave Credit and household employment taxes. The IRS has seen thousands of dubious claims come in where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and the need for taxpayers to show they have legitimate documentation to support these claims. Taxpayers who fall for these traps need to follow steps to verify their eligibility for the claim.
New scam mailing related to unclaimed funds
The IRS warns taxpayers to be on the lookout for a new scam mailing that tries to mislead people into believing they are owed a refund.
The new scheme involves a mailing coming in a cardboard envelope from a delivery service. The enclosed letter includes the IRS masthead with contact information and a phone number that do not belong to the IRS and wording that the notice is “in relation to your unclaimed refund.”
Employee Retention Credit scams and how to spot them
The IRS has issued many warnings about ERC schemes from third party promoters that charge large upfront fees or a fee based on the amount of the refund. And the promoters may not tell taxpayers that wage deductions claimed on the business’ federal income tax return must be reduced by the amount of the credit.
Businesses, tax-exempt organizations and others thinking about applying for the ERC need to carefully review the official requirements for this credit before they claim it.
Filing season scams involving fake W-2 wages
The IRS warns taxpayers of new scams that urge people to use wage information on a tax return to claim false credits in hopes of getting a big refund.
Pandemic-related email scams
In a continuing twist on a common scam, the IRS, state tax agencies and tax industry warn tax professionals to beware of evolving phishing scams that use various pandemic-related themes to steal client data.
Charity fraud awareness
Also see:
Beware of OIC mills – avoid costly promoters advertising settlement with the IRS for “pennies-on-the-dollar”
Scam targets educational institutions, including students and staff
Identity theft and unemployment benefits
Because unemployment benefits are taxable income, states issue Forms 1099-G, Certain Government Payments, to recipients and to the IRS to report the amount of taxable compensation received and any withholding. Box 1 on the form shows “Unemployment Compensation.”
Taxpayers who received a Form 1099-G for 2020 unemployment compensation that they did not receive should take the steps outlined at Identity theft and unemployment benefits.
Scams related to natural disasters
The IRS reminds taxpayers that criminals and scammers try to take advantage of the generosity of taxpayers who want to help victims of major disasters.
See:
IRS: Don’t be victim to a "ghost" tax return preparer
Report these schemes
- Email dataloss@irs.gov to notify the IRS of a W-2 data loss and provide contact information. In the subject line, type “W2 Data Loss” so that the email can be routed properly. Do not attach any employee personally identifiable information.
- Email the Federation of Tax Administrators at statealert@taxadmin.org to learn how to report victim information to the states.
- Businesses/payroll service providers should file a complaint with the FBI’s Internet Crime Complaint Center (IC3.gov). Businesses/payroll service providers may be asked to file a report with their local law enforcement.
- Notify employees so they may take steps to protect themselves from identity theft. The FTC’s identitytheft.gov provides general guidance.
- Forward the scam email to phishing@irs.gov.
- See more details at Form W-2/SSN data theft: Information for businesses and payroll service providers.
Employers are urged to put protocols in place for the sharing of sensitive employee information such as Forms W-2. The W-2 scam is just one of several new variations that focus on the large-scale thefts of sensitive tax information from tax preparers, businesses and payroll companies.
Tax professionals who experience a data breach also should quickly report the incident to the IRS. See details at Data theft information for tax professionals.
See:
Scams targeting tax professionals
Increasingly, tax professionals are being targeted by identity thieves. These criminals – many of them sophisticated, organized syndicates – are redoubling their efforts to gather personal data to file fraudulent federal and state income tax returns. The Security Summit has a campaign aimed at tax professionals: Protect your clients; protect yourself.
IRS, Security Summit partners urge tax pros to take actions to prevent data theft
The Security Summit provides awareness campaigns throughout the year. These include:
- Protect your clients; protect yourself
- Protect your clients; protect yourself — Summer 2023
- Taxes. Security. Together.
- National Tax Security Awareness Week
Also see:
- Latest spearphishing scams target tax professionals
- Security Summit: Identity protection PINs provide an important defense against tax-related identity theft
- IRS Security Summit renews warnings for tax pros to guard against identity theft amid continued threats
- IRS, Summit partners issue urgent EFIN scam alert to tax professionals
Soliciting Form W-2 information from payroll and human resources professionals
Increasingly, tax professionals are being targeted by identity thieves. These criminals – many of them sophisticated, organized syndicates – are redoubling their efforts to gather personal data to file fraudulent federal and state income tax returns. The Security Summit has a campaign aimed at tax professionals: Protect your clients; protect yourself.
Report these schemes
- Email dataloss@irs.gov to notify the IRS of a W-2 data loss and provide contact information. In the subject line, type “W2 Data Loss” so that the email can be routed properly. Do not attach any employee personally identifiable information.
- Email the Federation of Tax Administrators at statealert@taxadmin.org to learn how to report victim information to the states.
- Businesses/payroll service providers should file a complaint with the FBI’s Internet Crime Complaint Center (IC3.gov). Businesses/payroll service providers may be asked to file a report with their local law enforcement.
- Notify employees so they may take steps to protect themselves from identity theft. The FTC’s identitytheft.gov provides general guidance.
- Forward the scam email to phishing@irs.gov.
- See more details at Form W-2/SSN data theft: Information for businesses and payroll service providers.
Employers are urged to put protocols in place for the sharing of sensitive employee information such as Forms W-2. The W-2 scam is just one of several new variations that focus on the large-scale thefts of sensitive tax information from tax preparers, businesses and payroll companies.
Tax professionals who experience a data breach also should quickly report the incident to the IRS. See details at Data theft information for tax professionals.
See:
Surge in email, phishing and malware schemes
Schemes
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Phishing (as in “fishing for information”) is a scam where fraudsters send e-mail messages to trick unsuspecting victims into revealing personal and financial information that can be used to steal the victims’ identity.
The IRS has issued several alerts about the fraudulent use of the IRS name or logo by scammers trying to gain access to consumers’ financial information to steal their identity and assets.
Scam emails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. These phishing schemes may seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.
Be alert to bogus emails that appear to come from your tax professional, requesting information for an IRS form. IRS doesn’t require Life Insurance and Annuity updates from taxpayers or a tax professional.
Variations can be seen via text messages. The IRS is aware of email phishing scams that include links to bogus web sites intended to mirror the official IRS website. These emails contain the direction “you are to update your IRS e-file immediately.” These emails are not from the IRS.
The sites may ask for information used to file false tax returns or they may carry malware, which can infect computers and allow criminals to access your files or track your keystrokes to gain information.
Unsolicited email claiming to be from the IRS, or from a related component such as EFTPS, should be reported to the IRS at phishing@irs.gov.
For more information, visit the IRS’s Report phishing webpage.
Fraudsters posing as Taxpayer Advocacy Panel
Some taxpayers receive emails that appear to be from the Taxpayer Advocacy Panel (TAP) about a tax refund. These emails are a phishing scam, trying to trick victims into providing personal and financial information. Do not respond or click any link. If you receive this scam, forward it to phishing@irs.gov and note that it seems to be a scam phishing for your information.
TAP is a volunteer board that advises the IRS on systemic issues affecting taxpayers. It never requests, and does not have access to, any taxpayer’s personal and financial information.
Contact the Pinnacle CPA Advisory Group
Need help with your taxes? Contact the experts at Pinnacle CPA Advisory Group. Call our Columbus offices at (614) 942-1990, send email to us at info@cpaagi.com, or just fill out the Contact form on this website, at cpaagi.com/contact.