Defending Against Tax Scams

Defending Against Tax Scams

In 2024 the IRS’s Criminal Investigation unit identified more than $9 billion in tax fraud and financial crimes. Nearly 25% of Americans have been impacted by tax scams. Since many people don’t report these crimes, the true figure of fraud is probably much higher.

That is a staggering figure that should urge caution. Worse, in our digital world it is hard to avoid dealing with electronic communication.

To protect yourself, here are tips to better navigate.

The IRS does a good job identifying the most common and outrageous scams currently being perpetrated. The IRS’s “Dirty Dozen” are listed here: https://www.irs.gov/newsroom/dirty-dozen-tax-scams-for-2025-irs-warns-taxpayers-to-watch-out-for-dangerous-threats

Now is a good time to be wary as scams often peak right before tax-filing season. Many scams follow a pattern.

The Fake IRS Agent is a common tactic where a scammer pretends to be with the IRS. They will call, email or text saying there is a problem with your tax return, and you owe more than previously thought. Frequently, they threaten arrest or repossession of assets if you don’t pay up quickly.

The IRS will not text, email or call you. If they have formal communication with you, they will send a letter.

A sister scam notifies you of a large tax refund. However, they will ask for direct information on your bank account. If they obtain info on your bank account, it positions them to steal.

The Fake Tax Professional has people posing as fake tax preparers, or ghost preparers, who target people to inform them they are due a tax credit. Often, it will be common sense that you don’t qualify.

Be on alert for any tax preparers who refuse to sign your tax return, who insist on payment in cash or promise unrealistic refunds.

How should the average person proceed in a world littered with land mines?

  1. Slow down. Most schemes push for fast decisions. Nothing with the IRS requires immediate action. If you make fast decisions, especially when tired, you are most vulnerable.
  2. Be hyper-vigilant when online. The internet is a market for buying services. However, you have little idea whether you’re dealing with legitimate professionals, or criminals running scams from Russia, China or next door.
  3. Update your computer malware. In doing so, you limit chances of being hacked by fraudulent websites designed to steal your information using software delivered maliciously.
  4. Change passwords regularly. Make them long and complex. Don’t reuse passwords on different sites.
  5. Don’t randomly click weblinks. If something appears to be spam, or worse, don’t click it. Simply delete it. Avoid phishing scams in your email by carefully reading the senders email address. Examine links carefully and don’t click on anything you weren’t expecting. Instead of clicking on links in emails, go directly to the actual website you normally use.
  6. Independently verify phone numbers and websites. Never take someone’s word that they are who they are. Have the mindset you are dealing with a thief. If they tell you they are from a tax prep service or the IRS, get their contact information and then hang up. Spend time independently verifying who they are and their organization. The IRS will always use the “IRS.gov” in the URL. Again, the IRS will not call, email or text you.
  7. Establish an Identity Protection PIN: An IP PIN is a unique six-digit number verifying your identity when you file an electronic or paper tax return. It prevents someone else from filing a tax return with your personal information. You can request an IP PIN through the IRS. https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin
  8. Pick up the phone. The beauty of living in south Texas is we probably know our tax professional personally. Whether I receive something that looks strange or perfectly legitimate, I often pick up the phone or send an independent email. I confirm with the person who sent a tax document that they actually sent it and what needs to be done with it. Yes, this slows things down. However, that is part of the defensive process.
  9. Regularly monitor your credit report and tax records for suspicious activity.
  10. Get a credit freeze. Most people don’t need to obtain credit on a regular basis. A credit freeze through Experian, Equifax and TransUnion will allow you to sleep better at night.

Dave Sather is a Certified Financial Planner and the CEO of the Sather Financial Group, a fee-only strategic planning and investment management firm.