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Scammers are always looking at ways to separate you from your money and they are using the tax season to try and trick taxpayers into falling for various fraud schemes.
With millions of Americans sharing personal and financial information, tax season is a prime time for scammers to steal not just your refund but also your identity, experts say.
“Anybody can be a victim,” said Jennifer Hessing, who works as a fraud analytics director at Wells Fargo.
Hessing said she experienced having someone file a tax return in her name with stolen personal information. The Internal Revenue Service caught the fraudulent filing, and Hessing now has established an identity protection PIN with the IRS.
Set up an identity protection PIN
Hessing’s precaution is a smart one to emulate. An IP PIN — a unique six-digit number — verifies your identity when you file an electronic or paper return, and prevents someone else from filing a tax return with your personal information. Victims of tax-related identity theft who have resolved their issues receive a new PIN mailed to them from the IRS each year.
Individuals can also proactively request an IP PIN through the IRS. Your spouse and dependents are also eligible for an IP PIN if once they go through a verification process.
“Don’t wait to become a victim to receive this,” Hessing said.
Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.
Underscoring the growing sophistication of scams targeting taxpayers, Americans lost $9.1 billion in fraud from tax and financial crimes in 2024, according to the IRS.
“It’s not a fringe issue anymore, said Steve Grobman, chief technology officer at McAfee, a cybersecurity company. Nearly one in four Americans, 23%, have been impacted by a tax scam at some point, according to a recent McAfee survey.
Ignore unexpected tax emails, texts
One of the easiest ways to avoid getting scammed is to ignore urgent-looking text or email messages that claim to be from the government or a tax preparation service, experts say.
Fraudsters often use urgency and fear tactics in their messages to manipulate victims into acting quickly without verifying the source’s legitimacy, aiming to steal sensitive information or install malware, experts explain.
The IRS says it doesn’t initiate contact via text or email regarding tax payments or refunds. If you receive an unexpected message about a tax issue, don’t react impulsively, experts say. Don’t click on any links in the message. Instead, verify its source directly through the IRS website or your trusted tax professional.
“The IRS won’t be calling you, demanding instant payment,” Hessing said, or threatening “that you will get deported or jailed if you don’t pay your bill right now.”
Don’t pay your tax bill with crypto
Meanwhile, scammers are studying demographics for cryptocurrency schemes. Men are more often targets of crypto tax scams, according to McAfee.
“They [scammers] are creating narratives that sound plausible, such as, if you pay your taxes with cryptocurrency, you can extend the deadline or have a discount,” Grobman said. (Neither claim is correct. Plus, the IRS does not allow you to pay your federal tax bill with crypto, although some states will allow it.)
Unlike credit cards and bank transactions, there’s a lack of safeguards to paying with digital currency. The IRS treats crypto as property for tax purposes and does not accept it as payment.
“If you pay somebody with cryptocurrency more often than not, the money is gone,” Grobman said.
Improve your ‘cyber hygiene’
To help protect your personal data, experts encourage taxpayers to use strong, unique passwords for each account and enable two-factor authentication where possible. Also, never re-use passwords for online accounts and never share passwords with anyone.
Reach out to your financial institutions to find out what security measures are available.
“Asking to understand how you can better lock down your digital life is great cyber hygiene for folks that are in an unfortunate position to have been involved in a scam,” Grobman said.
What to do if you’ve been scammed
If you think you’ve been scammed, had your information stolen or suspect someone is committing tax fraud, report it to government authorities. The IRS says if your Social Security number or individual tax identification number was stolen, immediately report it to the Federal Trade Commission at IdentityTheft.gov, and to the IRS.
If you’ve been scammed and someone used your information to file a tax return, get a copy of the return and submit an Identity Theft Affidavit form online or mail it to the IRS.
If your tax preparer filed a fraudulent return, submit a mail Return Preparer Complaint form to inform the IRS.
You can also find information on scams that target veterans, service members and their families or caregivers at VSAFE.
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