Don’t Get Scammed! Top IRS Tax Scams to Watch for in 2024

The Internal Revenue Service (IRS) warns taxpayers to be vigilant against increasingly sophisticated tax scams every year. As scammers find new ways to trick taxpayers into divulging personal information or making payments, knowing how to identify scams is critical.

This article will provide an overview of the top 5 IRS tax scams likely to target taxpayers, explain how the scams work, offer advice for those who may have fallen victim, and provide key takeaways to avoid becoming a victim.

Overview

Tax scams pose a serious threat, allowing criminals to steal money and identities from unsuspecting taxpayers. The IRS reported a massive surge in scam attempts during the COVID-19 pandemic, as government relief payments created new opportunities for fraudsters.

While scam tactics evolve each year, common schemes include phishing emails and texts designed to mimic legitimate IRS communications. Criminals request personal information or install malware that steals data for identity theft. Bogus calls threaten arrest, deportation, or license revocation if immediate payment is not made.

Knowing the latest scams and the red flags can help taxpayers identify improper or suspicious contacts before falling victim. The following overview outlines four of the top expected IRS tax scams, providing details on how they work and advice to avoid becoming a target.

#1 IRS Tax Refund Scam

One of the most ubiquitous scams each tax season involves emails, texts, and social media messages related to an unclaimed tax refund. Criminals pretend to be from the IRS, telling the recipient that they qualify for a tax refund. Scammers then provide instructions to claim the refund, typically directing victims to click on a link to submit personal details.

How the Tax Refund Scam Works

This scam starts when a taxpayer receives an unexpected message regarding an IRS tax refund. Emails, social media messages, and texts are common strategies.

The message appears credible on the surface. It may:

• Reference the potential victim by name and include their email address or phone number. Criminals buy and sell personal information online or make educated guesses after data breaches.
• Use IRS logos, images, or header formatting mimicking a legitimate agency communication.
• Provide a case number, refund amount, and steps to claim the funds. Refund amounts of a few hundred to several thousand dollars are common to entice action.
• Direct the taxpayer to click on a link to complete a form, provide bank details, or confirm eligibility. The link leads to a fake IRS website controlled by scammers.

Once on the fraudulent site, taxpayers are prompted to enter sensitive data like Social Security numbers, bank account information, or copies of personal documents. Criminals use this data for identity theft or directly steal any refund owed to the taxpayer.

This scam is effective because it takes advantage of a situation familiar to most taxpayers – waiting on an expected tax refund. Guarding personal data is key to avoiding this scam.

What to Do if You Fell Victim to the Tax Refund Scam

If you provided sensitive information or clicked on links in a suspicious tax refund contact, take these steps quickly:

• Contact banks and credit cards: Alert your financial institutions to the potential data compromise. Freeze accounts as warranted and watch for fraudulent charges.
• Change passwords: Update passwords for email, financial accounts, IRS accounts, and other login portals that use the same password. Make passwords long and complex.
• Check credit reports: Request free annual credit reports from Equifax, Experian and TransUnion to check for signs of new accounts or addresses opened by identity thieves. Consider placing a credit freeze with each bureau.
• File an IRS ID Theft Affidavit: Notify the IRS that a scammer attempted to claim your refund by filing an Identity Theft Affidavit (Form 14039). This alerts them for special screening of your return.
• Report to the Treasury Inspector General for Tax Administration: Report IRS imposter scams to help stop ongoing schemes and prosecute criminals.

By reporting the scam attempt and taking precautions, you can reduce the chances of refund theft or identity compromise. But acting swiftly after engaging with a suspicious contact is critical.

#2 IRS “Offer in Compromise” Scam

Debtors learning about the IRS “Offer in Compromise” program for tax debt reduction often become targets of a related scam. Criminals pretend to represent legitimate Offer in Compromise services to deceive vulnerable taxpayers.

How the Offer in Compromise Scam Works

With this scam, victims typically receive an email or see an online advertisement promoting tax debt relief through the IRS Offer in Compromise (OIC) program. Tactics to appear credible include:

• Using the IRS logo and official program name.
• Citing experienced tax attorneys or enrolled agents who can renegotiate tax debt.
• Promising to lower owed balances by 70% to 90%.
• Providing realistic-looking websites with application forms and payment portals.

Taxpayers struggling with liabilities are enticed to contact the advertised company for help applying for relief. The scammers then exaggerate eligibility and push victims to pay large upfront fees of several thousand dollars for the OIC process. Payments are requested via wire transfer, gift card, cryptocurrency, or prepaid debit card to enable quick theft.

Once payments are collected, scammers take the money without filing an Offer in Compromise. The compromised personal data also facilitates future identity theft.

What to Do if You Fall for an OIC Scam

Those tricked by an Offer in Compromise scam should take these steps right away:

• Alert your bank: If you paid by credit card, have the issuer reverse the charges for fraudulent transactions. For wire transfers, contact the originating bank to try stopping or reversing the payment.
• Report the fraud: File complaints with the Federal Trade Commission and your state attorney general regarding the deceptive business practices. Provide any available details on the scam company.
• Place fraud alerts: Contact credit bureaus to request fraud alerts on your credit files and order credit reports to check for misuse. Consider freezing credit records to block thieves from opening new accounts.
• Assess tax impacts: Talk to a legitimate tax professional to understand if and how the scam impacts your actual tax liability and IRS repayment options like the real OIC program. Ensure future filings are accurate.
• Report to TIGTA: Notify the Treasury Inspector General for Tax Administration about IRS scams to help warn others and stop ongoing schemes.

#3 Fake IRS Tax Assistance Program

Another common ruse tricks taxpayers into paying for fake tax assistance or services to lower their tax bills. Scam artists pretend to represent new IRS tax relief, payment, or filing programs to appear credible.

How the Tax Assistance Scam Operates

This scam starts with an unsolicited phone call, email, text, or social media message promoting some urgent new IRS tax break or filing option. Criminals typically pretend to be affiliated directly with the IRS versus a tax prep company. Common scam tactics include:

• Citing a new law or COVID-19 relief program providing tax credits or requiring special filings. This hooks worried taxpayers needing updated information.
• Using threats of audits or penalties to make taxpayers think they missed important changes or compliance items.
• Including real IRS phone numbers in emails or telling taxpayers to call for eligibility verification. The numbers connect to scammers posing as IRS help desk agents.
• Directing victims to a website seeking personal data to “pre-qualify” for benefits or register for tax assistance.
• Charging a fee of $50+ to establish eligibility, register for the fake program, or receive direct assistance with filing, back taxes, audits or levies.

Once payments are collected, scammers disappear without providing services. Compromised information also enables future fraud.

What to Do if You Paid for Phony Tax Assistance

Taxpayers scammed into paying for useless tax help services should take these steps to mitigate losses and damages:

• Alert banks and credit cards: Report fraudulent charges and monitor accounts for other suspicious charges.
• Verify filing details: Talk to a legitimate tax professional to ensure no issues with past returns or payments claimed through the scam. Confirm any details provided to scammers have not compromised your tax accounts.
• Report tax identity theft: If concerns about personal data compromise, file an IRS ID Theft Affidavit (Form 14039) to flag your account for credit monitoring.
• File FTC and state complaints: Report deceptive business practices and details on the scam company to consumer protection agencies. Provide any company names, websites, addresses, or contact information.
• Monitor credit reports: Order free annual credit reports to watch for signs of new accounts or addresses opened by ID thieves. Place fraud alerts or credit freezes if concerned about data misuse.

#4 Fake IRS Unpaid Taxes Notice

One long-running scam tactic is to contact taxpayers claiming they owe back taxes to the IRS. Criminals threaten penalties or arrest if immediate payment is not made, creating fear to trick urgency.

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How the Unpaid Taxes Scam Works

This scam starts with contact by phone, email, text or letter claiming the recipient has unpaid back taxes and serious consequences are coming if immediate payment is not made. Tactics to scare taxpayers include:

• Phone calls from individuals claiming to be IRS agents and referencing badge numbers or employee IDs. Calls may also come from numbers spoofed to appear as IRS offices.
• Letters sent via postal mail with IRS letterhead and officer names and signatures. Details like addressed from actual IRS campuses add legitimacy.
• Emails with IRS logos and headers linking to official-looking sites controlled by scammers.
• Text messages providing case numbers and threats of penalties or arrests if funds are not remitted quickly.

Once contacted, taxpayers are told they owe sometimes tens of thousands in unpaid taxes, though amounts can vary. Scammers threaten consequences like property liens, bank levies, asset forfeiture, or arrest if immediate payment is not made.

Victims are instructed to pay purported tax debts via difficult-to-recover methods like gift cards, wire transfers, cryptocurrency, or prepaid debit cards. Scammers also request sensitive data like Social Security numbers and bank details to facilitate identity theft.

Frightened taxpayers end up scammed out of large sums, though no back taxes were actually owed. This scam persists given the innate fear of IRS penalties and enforcement action.

What to Do if You Paid Fake Back Taxes

Taxpayers tricked by back taxes scams should take the following steps:

• Verify with the IRS: Contact the IRS directly to validate if any unpaid balances truly exist or confirm any enforcement actions initiated. Often scammers fabricate the debts.
• Alert banks and card issuers: Report unauthorized charges paid toward the scam debts and monitor accounts closely for follow-on fraud.
• File reports: Submit detailed scam reports to the Treasury Inspector General for Tax Administration, Federal Trade Commission, and state attorney general.
• Address possible ID theft: Pull credit reports and place fraud alerts or a credit freeze if the compromise of personal data could enable identity theft.
• Seek legal and tax help: Consult a tax professional and lawyer to address damages from bogus payments, ensure no pending issues with the real IRS, and pursue refund of any fraudulent payments if possible.

#5 Fake IRS Audit Notification Scam

Scammers often try to take advantage of taxpayers’ fears of being audited by sending fake IRS audit notices. The notices threaten dire penalties and try to trick people into paying fake fees or “fines.”

How the Fake Audit Scam Works

This scam typically starts with the taxpayer receiving a letter, email, or phone call claiming to be from the IRS auditor’s office. The communication will:

• Allege discrepancies or problems identified on a recent tax return. Scammers often say taxes were underreported or something was suspicious.
• Threaten the taxpayer with steep civil or criminal penalties for tax evasion if the ambiguous issues are not addressed.
• Provide a short deadline of 2-3 weeks to contact the IRS and begin “audit proceedings.” This is meant to incite panic.
• Include a fake case number, IRS letterhead, and officer’s name/signature for legitimacy. Calls will reference badge numbers.

Once contacted, the scammers will request personal information to “verify identity” and bank account details to process “fines.” Victims may also be told to pay gift cards or other unusual means. The data enables future identity theft.

What to Do if You Get a Fake IRS Audit Notice

If you receive a suspicious audit notification, take these steps:

• Call the IRS to verify if any real audits or issues with past returns exist. Often the notices are complete fakes.
• Do not provide any personal or financial information to the scammers who contact you.
• Save emails or letters as evidence and report the scam attempt to the Treasury Inspector General for Tax Administration.
• If concerned about identity theft, request credit reports and consider placing fraud alerts or a credit freeze with credit bureaus.

The IRS will not call or email about audits out of the blue. Any legitimate inquiries will arrive by mail and through established processes giving taxpayers rights to appeal findings.

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Frequently Asked Questions about IRS Tax Scams

1. How can I tell if a call, email, text or letter from the IRS is a scam?

The IRS will never initiate contact by phone, email, text or social media to discuss your tax affairs. Any unexpected calls or messages claiming to be the IRS should be treated as suspicious. The IRS nearly always starts communication via postal mail.

Legitimate IRS staff will not threaten you or demand immediate payment without chance to question or appeal the amounts owed. Threats of arrest, deportation or asset seizure are common scare tactics scammers use but are not how the IRS operates. Requests for strange payment types like gift cards or wire transfers are also clear red flags of fraud.

2. I received an email/text/call about a tax refund I wasn’t expecting. What should I do?

Unexpected communication instructing you to claim a tax refund is almost surely a scam attempt to steal your personal information. Do not click links, provide data, or engage in any way. Forward suspicious emails pretending to be from the IRS to phishing@irs.gov. Report unsolicited texts or social media contacts to the IRS.

Call the IRS directly if you have any doubt about expected refunds or tax documents. The IRS will never request your full SSN, bank details, or copies of sensitive information over email to release a refund. Beware phone numbers in suspicious emails as they typically connect to scam call centers.

3. Are threats of arrest or asset seizure for unpaid taxes common?

Threats of immediate arrest or asset seizure are a frequent scare tactic used by IRS imposter scams via phone, email, text and letter campaigns. However, the IRS cannot legally enforce criminal charges for unpaid taxes and does not conduct raids on homes or businesses. Financial penalties and interest are more likely results of tax underpayment or delinquency.

If contacted with threats of legal action or asset seizure, report the incident to TIGTA and local law enforcement. Call the IRS directly regarding any purported tax bills to avoid being swindled by the threats of scammers.

4. What are signs of the “Offer in Compromise” scam?

Misuse of the IRS “Offer in Compromise” program is a common scam tactic. Warning signs include unsolicited promotions via email or online ads for guaranteed tax debt relief through an OIC. Scam companies also request large upfront fees of several thousand dollars to prepare or submit an OIC application for you.

The real IRS OIC program does not work with or endorse any private companies. All official guidance on the program is available free on the IRS website. Applications involve rigorous eligibility reviews and not guarantees of approval. Never pay any company substantial fees prior to preparing or filing an Offer in Compromise.

5. Are there legitimate IRS tax assistance programs that help taxpayers?

Yes, the IRS provides several programs to help taxpayers with tax preparation, filing, payments, and navigating audits or collections. However, assistance is limited for most initiatives and

The Bottom Line: Protecting Yourself from IRS Tax Scams

IRS impersonation scams arise each tax season and evolve as scammers find new ways to take advantage of taxpayers. Whether via fake refunds, relief programs, or unpaid tax bills, their goal is to steal money and data.

Taxpayers can avoid becoming victims by understanding common scam tactics and red flags. Legitimate IRS contacts will not:

• Threaten arrest, deportation, revocation of licenses, or seizure of property for nonpayment.
• Demand immediate payment via gift cards, wire transfer, or cryptocurrency. The IRS provides multiple payment options, none of which involve these obscure methods.
• Request sensitive data like Social Security numbers or bank account details via email, text or social media.
• Use email, text, or social media to discuss tax bills or refunds. IRS rarely initiates contact outside postal mail.

Staying vigilant against scams and understanding how to respond if you fall victim can protect from tax identity theft and financial losses. Report any suspected IRS scams to the Treasury Inspector General for Tax Administration to assist enforcement efforts targeting these criminal operations.