Income Tax Identity Theft Scams – How to Spot Them and Stay Safe

Income tax is an unfortunate necessity, and, thus, not necessarily fun. This can be compounded by the sheer number of tax fraud scams out there, which always seem to pop up every tax season. One such category of scams targets your personal information connected to your tax info, which leaves you wide open to fraud, theft, or a loss of benefits.

In this article, we’ll show you how to identify income tax identity scams and avoid falling for them.

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What Is Income Tax Identity Theft?

This broad category of fraud covers a wide variety of practices, all designed to separate you from your personal info. Generally, during January, when most employees receive their W-2 forms from employers, scammers will contact victims and claim to be from the IRS and ask for personal information. They then use this information to file a return, but in their own name and obtain all the benefits and refunds intended for their victims.

Because many people wait until close to the deadline to file their tax returns (it’s a pain, we know), the scammers often have ample time to file in the victims’ names. Once the benefits are received by the fraudsters, the check is cashed, and the victim can be left in the dark about what happened to their anticipated refund for many months, not knowing they’ve been scammed until it’s too late.

Prevention is better than cure with this type of scam. So, let’s look at how to spot it.

How to Spot the Income Tax Scam

Every year, the IRS posts the “Dirty Dozen,” a list of the types of scams that target your identity and personal information. While bad tax advice and misinformation may be plentiful on social media, scammers usually contact their victims directly. These scams are primarily done through email and text message correspondence.

Let’s take a look at some ways this scam can manifest:

Scammers offer to help victims create an account with the IRS. Third-party assistance isn’t required, and creating an account is easy to do on your own.
Some tax consultants are not what they advertise, and disappear after obtaining a victim’s personal information. These scams are hard to spot because of the legitimacy of many consultants.
Scammers also tell victims that they can claim certain benefits they aren’t qualified for, including self-employment tax and fuel tax credit.
A popular W-2 scam has scammers overstating the amounts the victim has earned by listing fake employers, then claiming the refunds the IRS will give due to (fraudulent) withholding. The scammers use the victim’s personal info to claim all the benefits.
Scammers will also target specific organizations with malware in order to obtain large amounts of information. Malware can easily steal identities if opened, putting the information of many at risk.

Avoiding the Income Tax Scam

There’s no one way to identify an income tax Identity scam, but there are definitely red flags that can help:

The IRS will never contact you directly to ask for your personal information. Treat any request to do so with suspicion.
If the message you receive comes with urgency or a threat, be careful and don’t follow any links in the message. Rather, contact the IRS directly.
Look for spelling and grammatical errors in the message. The same applies to hyperlinks and email addresses. Beware of numbers included in a URL or address (e.g., irs123.gov)
Beware of any attachments in a message, especially if the email isn’t related to any official tax channels.
Be sceptical of any organization promising you great savings or hidden loopholes you can take advantage of. These paydays seldom deliver, and can land you in trouble with the IRS.
Any reputable tax consultant should have no problem signing a return or offering you their PTIN.
When in doubt, contact the IRS directly about any message and ask.

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