Wherever there’s money, there’s the potential for a scam. And there’s a lot of money in the federal tax collection process. Seeing the opportunity to make a dishonest buck, scammers use a multitude of schemes to trick innocent taxpayers into giving personal information. The scammers then use this information to steal money from the taxpayer or use the taxpayer’s identity to commit financial crimes. Don’t be a victim of phishing tax scams.
How Does Phishing Work?
The term “phishing” is derived from the activity of fishing, where scammers use bait to lure victims into divulging sensitive personal or financial information. Just like how a fisher can’t dangle an empty hook in the water and expect a fish to bite it, a scammer can’t go to its victim and ask them to spontaneously give up personal information.
So what the scammer does is use bait. The bait will usually be an official looking email (it could also be a text message or a message through social media) that claims to be from a legitimate organization, such as a bank, company or the IRS. The email will then make up a reason ask for personal information which can include a date of birth, social security number or bank account information.
Besides looking real, the email can say any number of things to trick the victim into providing the information. The scammer might say that the victim’s bank account has been compromised and the victim must immediately click a link in the email to sign in and verify his or her account. Or the email might tell the victim they are entitled to a refund check, but that the victim needs to provide banking information so they can receive payment.
Whatever the lie, the scammer hopes that the victim will fall for the bait and click on a link in the email or otherwise provide the requested information.
What Does the IRS Have to do With Phishing?
Given the fear many people have of getting into trouble with the IRS or the expectation of receiving a tax refund, some people fall prey to phishing scams. What usually happens is that the scammer pretends to be from the IRS and tries to convince the victim that there is an issue with his or her taxes or that they are entitled to a tax refund check. The scammer then explains that the only way to resolve the tax problem or receive the refund check is to provide his or her personal information.
Once the scammer has this information, they will steal the victim’s identity and can do anything from taking money directly from the victim’s bank account to opening a credit card. One particularly sneaky strategy is to steal the victim’s tax refund check by completing a fraudulent tax return using the victim’s personal information. Then when the victim attempts to file a legitimate tax return, they soon find out one has already been filed with the tax refund check already issued.
How to Avoid Becoming a Victim of a Phishing Scam
Many phishing emails can be pretty convincing. But taxpayers must understand that the IRS will never initiate contact with the taxpayer via email or other forms of electronic media, like text messages or social media. If a taxpayer receives an unsolicited email, text message or social media contact from the IRS, it’s probably a phishing attempt.
When in doubt, an individual can always go directly to the organization that purportedly sent the electronic communication. For example, if a text message or email claims to be from the IRS, the taxpayer shouldn’t reply to the message or email. Instead, they can go to the IRS’ website and make contact with the IRS that way.
Reporting Phishing Scams
Anyone who believes they received a phishing scam attempt can forward it to the IRS at [email protected].