Tax season is in full swing, which means tax scammers are working overtime to find new targets. Over the next month or two, these con artists will make use of the complexity of the tax code and take advantage of taxpayers feeling financial pressure to pay their taxes and meet the April 15 filing deadline. The following is an overview of some of the more recent tax scams, many of which utilize the same strategies from years past, but with slight changes to take advantage of new technology.
Tax Scam #1: Phishing Schemes
Phishing has been around for decades, but with advancements in artificial intelligence (AI), they’re getting more sophisticated. For example, emails and text messages have been traditionally used for phishing cons, but most of the time, they’ve been fairly easy to spot.
They would often contain poor wording, incorrect identifying information, and typos, all of which made them stand out. But with the help of AI, these fake emails and texts are much harder to notice. Scammers use AI to generate more realistic messages that contain the personal information of the recipient, such as their name and address.
If you receive an email or text message purporting to be from the IRS, a bank, or other financial institution, don’t click on any links contained in the message. If you think it’s a legitimate message, use a search engine, like Google, to find a link to that organization’s website.
Finally, phishing scams can be found in other contexts, such as social media. A scammer might send you a DM or make a post about “secret” or “unknown” tax hacks or laws that can save you money or get you an unclaimed tax refund. Do not click on the links contained in these messages, as they may take you to a website designed to steal your personal information.
One thing to remember is that the IRS won’t initiate contact with you via email or text. If there’s an unclaimed tax refund or tax issue that needs your attention, the IRS will first send you a letter. They usually won’t text, call, or email you about a tax issue until after they’ve already brought the issue to your attention by letter or you’ve given the IRS permission to contact you in that particular way. The IRS has a great webpage that explains how and when they’ll contact you.
Tax Scam #2: AI-Generated Phone Calls
AI isn’t limited to just phishing messages. One of their best and newest applications has been with AI-powered phone calls. Scammers used to make the calls themselves or employ an easy-to-detect recording to try to trick targets. But now, with access to AI, these scammers can take a voice recording of a real person to create a personalized message that asks you for personal information.
AI may also be used to engage in fake conversations with you. The AI algorithms are designed to answer some of the more common questions or give preprogrammed responses to anticipated reactions from targets. As a result, it’s sometimes hard for potential targets to know they’re talking to a computer and not a human.
The best way to detect these sophisticated scam calls is to ask random questions. Instead of asking why “they” need the information, instead ask about the caller’s hometown or how long they’ve been working for the IRS. AI has come a long way over the past few years, but they’re not quite advanced enough to handle these unexpected questions from humans…at least for now.
Tax Scam #3: Fraudulent Tax Preparers
Some scammers pose as tax preparers who often lure victims with promises of money, such as large tax refund checks or other tax benefits. Their goals are usually two-fold. First, it’s to obtain personal information, such as date of birth, address, and Social Security number, and use that to file a fake tax return and steal a tax refund check. Second, it’s to obtain a fee for fake tax services.
For instance, they might say they can prepare your tax return and promise you a massive check from the IRS. In return, they need you to first pay them a tax preparation fee. After you pay this fee, they ghost you with no realistic chance of you ever getting your money back.
The good news is that most of these tax scammers can be spotted in advance. Here are some common fake tax preparer red flags:
- Promises or guarantees of large tax refunds.
- Can’t provide you with a Preparer Tax Identification Number, or PTIN.
- Asks you to sign your tax return before you can review it.
- They don’t show up in an online search, or if they do, they have a lot of negative reviews.
Conclusion
Tax scams can target you at any time, but the time before the April 15 filing deadline is when they’re most likely to reach out to you. If you believe someone has tried to use a tax scam on you, you should report it to the Federal Trade Commission, Internet Crime Complaint Center, or the Treasury Inspector General for Tax Administration.