Benjamin Franklin said that the only certain things in life
are death and taxes. While we get ready for tax season at the beginning of each
year, another certainty exists: cybercriminals will attempt tax-related scams.
April 18th marks the Internal Revenue Service’s (IRS) tax filing deadline for
2022. While you might be rushing to file your returns (breathe?….you still have
time), you may be the next target for a cyber-attack. During the tax season, fraudsters
and cybercriminals use social engineering to lure and deceive people into
unwittingly handing out credentials, money, and personally identifiable
information (PII).
Many cybercriminals also use the tax season to deliver
threats like ransomware, spyware, and banking trojans. Others use fake IRS
phone calls and online services to trick taxpayers into sending money to the
fraudster’s accounts.
Here’s what you need to know about tax scams and what you
should look out for to avoid them.
What are IRS Tax
Frauds
First, what is IRS Tax fraud? IRS Tax Fraud are scams usually
the beginning part of the year, revolving around tax preparation season. IRS
tax scams typically begin with an email posing as the IRS (there are other
methods of attacks)and redirect unsuspecting users to phishing and
malware-ridden websites. Emails can also have malicious attachments such as
spyware, backdoor or banking malware, and remote access trojans
impersonating legitimate files. These threats are designed to steal your PII,
which an attacker can then use to access your accounts or sell your account
info in underground marketplaces.
These threats became so prevalent that, in 2004, the IRS
came up with a list: the Dirty Dozen. Compiled annually, the Dirty Dozen list
details the most common scams to help protect taxpayers. Here are the IRS DirtyDozen for 2021
What to Look Out For
Below are some common thing to look out for.
·
Phishing Emails - Emails claiming to be from the IRS, typically promising you
with sizeable tax refunds or threatening you with legal action. Variations of
these schemes include hijacking your personal bank account, filing fraudulent
tax returns, and then asking the you to refund the money by posing as a
collection agency or the IRS. Other phishing schemes also target employee
financial information (e.g. Form W-2 data).
·
Phone Scams - Unsolicited phone calls claiming to be from the IRS
intimidating you with legal action to coerce you into paying a fake tax bill.
These scams also include the so-called “robocall,” a text-to-speech recorded
voicemail that directs you to contact a specific number.
·
Identity Theft - Tax-related identity theft schemes entail scammers using
stolen Social Security or Individual Taxpayer Identification numbers to claim
tax returns or refunds. Other cybercriminals target businesses by illicitly
filing corporate income tax returns using stolen identities.
·
Return Preparer
Fraud - This type of fraud involves tax
professionals/preparers filing false income tax returns. This includes claiming
inflated or excessive credits, expenses, deductions, and exemptions, sometimes
without your knowledge.
·
Inflated Refund
Claims - Scammers lure you by promising
you credits, rebates, or benefits. Some fraudsters use fake forms (e.g., W-2 or
Form 1099) which improperly report taxable income.
·
Falsifying Income
to Claim Credits - Like inflating refunds, this kind
of fraud involves reporting made up income to increase refundable tax credits.
Variations of this fraud include scammers conning you into signing fake forms
and providing PII in order to claim a refund.
·
Fake Charities – Fraudsters may set up fake charities then try to deceive you
into making donations or giving out your PII, luring you with tax incentives.
·
Pandemic-related scams. These
are scams fraudsters have taken advantage of since the 2020 pandemic. These
include scams regarding unemployment and stimulus payments, and may also ask
you to provide PII to claim tax credits.
The IRS has tons
of things to keep an eye out on, check out their Dirty Dozen for 2021 to see
what might be going on for 2022.
How
to avoid tax scams
You
should exercise caution. Never open links or attachments that come from
unexpected or suspicious senders, especially when they claim to be from
officials or agents of government organizations. Unsolicited email from an
IRS-related component such as Electronic Federal Tax Payment System (EFTPS)
should be immediately reported to the IRS via phishing@irs.gov.
To
help you avoid IRS scams, here are the things that the IRS will never do:
·
Call
and demand immediate payment or call about taxes owed without first having sent
a bill.
·
Initiate
contact by email to request personal or financial information.
·
Demand
tax payment without giving you the opportunity to question or verify the owed
amount.
·
Ask
you to give out credit and debit card information over the phone or email.
·
Require
you to use a specific payment method, such as a prepaid debit card, to pay your
taxes.
·
Threaten
to bring law enforcement to have you arrested for not paying.
