It is that dreaded time of year again, Tax Season! With taxes usually comes refunds, and it is that money scammers are after. Since the IRS is officially accepting all returns, thought we should take this week to focus on Tax Scams.
So what exactly is Tax Season fraud? Simply put, it is when a criminal steals a victim’s personal information to either file a fake return, claim a fraudulent refund, or impersonate an IRS official. According to the IRS Criminal Investigation department, about $4.5 billion in tax fraud was identified in 2025! The Better Business Bureau (BBB) also reports a rise in tax imposter scams during tax season. Scammers try to mislead taxpayers about refunds or amounts owed to the government in order to gain access to sensitive personal information.
Here are some key aspects of tax season fraud:
- Tax Identity theft: Scammers will file fraudulent tax returns using stolen information in order to get a victim’s refund before they can. When the victim files their actual return it will get flagged as a duplicate by the IRS. If it is e-filed, it will be rejected, and if mailed, the victim will receive a letter. Once the identity theft is discovered, the victim needs to act immediately and report it to the IRS by filing Form 14039. The IRS will start an investigation, and the process could take anywhere from several months to over a year to resolve. The victim’s legitimate refund will be delayed while the investigation is ongoing.
- Phishing & Smishing (texts/emails): If you receive a text or email from someone claiming to be the IRS, delete it. Do not click on any links that may be provided. The IRS will not initiate contact via email or text, they will send out letters. Scammers call or message, often demanding personal or financial information from their victims. They will pretend to be an IRS agent and threaten arrest or property seizure to scare people into making payments quickly. These payments are usually made through gift cards, wire transfers, or by using a payment site such as Cash App. The IRS will not ask for payment in this manner, and anytime someone uses urgent language to make you act before thinking it is almost always a scam.
- “Ghost” Preparers: Not everyone you trust to file your taxes is honest or trustworthy. There are some tax preparers who promise huge refunds to their victims at tax appointments. Everything looks great and the paperwork gets signed by the taxpayer, but once they leave the office the ghost preparer strikes. They can alter paperwork to add their own account for direct deposit, not sign the paperwork as the preparer as to not be held liable, even steal the victim’s personal information to use in a scam later.
How can taxpayers protect themselves?:
- File early: Submitting your return early gives scammers less of a chance to file before you. Once you have filed a legit return, an identity thief’s return will be the one getting flagged and investigated by the IRS.
- Use an Identity Protection PIN (IP PIN): Taxpayers can request an IP PIN from the IRS by visiting irs.gov. Also, when you e-file, you are asked to either input your previous year’s adjusted gross income (AGI) or the PIN. If you don’t request a PIN earlier, then you will be allowed to make one up, just be sure it is a 4 digit number you can remember and don’t share it with anyone.
- Never click links: Once again, the IRS will not text or email you asking for money. Any message you receive, delete, and don’t ever click on a link contained in the message. Links like that can release Malware onto your phone or computer or send you to another site where the fraudster waits to steal your info.
- Verify Preparers: Always be sure the tax professional you choose has a valid Preparer Tax Identification Number (PTIN). Also, if your return is simple, consider e-filing on your own. There are several trustworthy tax companies online that will walk you through the steps of filing and make it so easy to do. A lot of sites are free to file both Federal and State as long as certain criteria is met. You can find a list of reputable online sites at irs.gov.
Tax season is prime time for scammers. It can be stressful enough without having to worry about someone stealing your refund or identity. By keeping the red flags in mind while filing, safeguarding your personal and sensitive information, and being sure of the person preparing your taxes, you can help to prevent yourself from becoming a victim of Tax Season Fraud.
Have a great weekend!
Tara Montgomery
Exchange Bank of Alabama
Fraud Specialist
(256) 691-0328
