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Tax scams are on the rise, but the IRS is catching up

Tax season brings with it a host of scams, some familiar and some new, that criminals use to try and get taxpayers' money. But the government has stepped up its anti-fraud efforts, too.

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    Health care tax forms 8962, 1095-A, and 8965, in Washington (Aug. 21, 2014). It’s tax time, so you’d better think twice before clicking on that link in your email inbox. What may look like a legitimate communication from your bank, human resources department or email provider may actually be part of a scheme designed to steal the confidential information stored in your computer, or to gain access to the network it’s attached to.
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Tax season brings with it complicated returns, the looming hope of a big refund, and, unfortunately for many taxpayers, scams and identity theft.

Fortunately, the IRS has stepped up its own security measures in response, drastically increasing the effort it takes for a scammer to reel in a victim.  

Aggressive phone calls from criminals posing as the IRS remain the most common threat. In one of the largest ongoing scams, fraudsters target taxpayers telling them that they owe money to the IRS, which must be paid either through a prepaid debit card or wire transfer. Scammers frequently become hostile if the victim does not cooperate, sometimes threatening arrest or suspension of a driver’s license. This scam also targets recent immigrants, threatening them with deportation.

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And in a new phone scenario, scammers are now targeting individuals just as they are preparing their returns, claiming that the taxpayer need to verify their personal details before their return can be processed. 

The IRS itself typically initiates contact with taxpayers via mail, not by phone, and does not ask for wire transfers, prepaid debit card payments, or money orders.

“These schemes continue to adapt and evolve in an attempt to catch people off guard just as they are preparing their tax returns,” IRS Commissioner John Koskinen said in a March 14 press release. “Don’t be fooled. The IRS won’t be calling you out of the blue asking you to verify your personal tax information or aggressively threatening you to make an immediate payment.”

Fraudulent electronic communications are also on the rise. The IRS reports that e-mail phishing schemes and malware threats have increased by 400 percent during this tax season alone. Those e-mails pose as official communications from the IRS and seek personal information, including Social Security numbers, but the website links contained in them, while official in appearance, enable criminals to file false tax returns with the information they collect.

In order to combat these threats, the IRS has stepped up security. Taxpayers using software are now required to enter more authentication details before they can sign into their accounts. The government also continues to combat telephone scammers by using cease and desist warnings, working with telephone companies to shut down numbers associated with criminal activity, and publically publishing scammers’ numbers online.

According to Treasury Inspector General for Tax Administration J. Russell George, it's working. “These efforts are producing results,” the he said in a press release. “Where the perpetrators used to be able to get a victim every 40-50 calls, now they must make 300-400 attempts to claim a victim."

However, he noted that while the government’s anti-fraud efforts have been successful, it is also up to taxpayers to protect themselves from crime. Since 2013, taxpayers have paid scammers a combined $26.5 million.

“While we plan on arresting and prosecuting more individuals, the scam will not stop until people stop paying the scammers money,” he said. “Our best chance at defeating this crime is to educate people so they do not become victims in the first place.”

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