IRS Warns of ‘Relentless’ Wave of Tax Scams Targeting Americans

Internal Revenue Service (IRS) Commissioner Danny Werfel testifies before the Senate Finance Committee in Washington on Feb. 15, 2023. Kevin Dietsch/Getty Images

The Internal Revenue Service (IRS) has issued a warning to taxpayers and businesses about an unrelenting wave of tax scams targeting Americans through email and text messages during this filing season.

With the tax filing deadline quickly approaching, the IRS has issued a notice urging people to be on guard for phishing and smishing schemes in which cybercriminals try to steal a taxpayer’s information through scam emails or text messages.

“Email and text scams are relentless, and scammers frequently use tax season as a way of tricking people,” IRS Commissioner Danny Werfel said in a statement.

Taxpayers and tax professionals should be alert to fake communications coming from those posing as legitimate organizations in the tax and financial community, including from people pretending to work for the IRS or other federal or state government agencies.

“With people anxious to receive the latest information about a refund or other tax issue, scammers will regularly pose as the IRS, a state tax agency or others in the tax industry in emails and texts. People should be incredibly wary about unexpected messages like this that can be a trap, especially during filing season,” Werfel said.

These messages arrive in the form of an unsolicited text or email to lure unsuspecting victims to provide valuable personal and financial information that can lead to identity theft, the IRS warns.

The IRS initiates most contact through regular mail and will never contact taxpayers by email, text, or social media regarding a bill or tax refund, it said.

Individuals should never respond to tax-related phishing or smishing or click on links, the IRS advises. Instead, the scams should be reported to the IRS by sending the email or a copy of the text as an attachment to [email protected].

The IRS also warned taxpayers to be wary of messages that appear to be from friends or family but that are possibly stolen or compromised accounts. Individuals should verify the identity of the sender by using another communication method, such as calling a number they independently know to be accurate, not the number provided in the email or text.

Dirty Dozen

The IRS included the warning as part of its annual “Dirty Dozen” tax scams campaign. The initiative aims to protect taxpayers, businesses, and the tax system from identity thieves and all manner of hoaxes designed to steal money and information.

The annual list of common tax scams includes phishing, Social Security Number scams, ransomware, fake charities, senior fraud, COVID-19 scams, cryptocurrency scams, social media scams, impersonator phone calls, identity theft, inflated refund claims, and promoter fraud.

A separate IRS alert issued Tuesday as part of the initiative warned that some scammers are falsely advertising the availability of Employee Retention Credits (ERCs) to gain fraudulent refunds.

Taxpayers have been bombarded with inaccurate information on eligibility and computation of the credit, the IRS said.

The ERC has been a lifeline for millions of businesses during the COVID-19 pandemic, providing a refundable tax credit to employers who continued paying their employees amid lockdowns or experienced a significant decline in gross receipts during the eligibility periods.

“We urge honest taxpayers not to be caught up in these schemes,” Werfel said in a statement. “The aggressive marketing of these credits is deeply troubling and a major concern for the IRS.”

The IRS warned that it has trained auditors examining these types of claims and the agency’s criminal investigation division is on the lookout for fraudulent claims. Taxpayers are ultimately responsible for the accuracy of the information on their tax return, and claiming the ERC when they’re ineligible could result in penalties.

“Improperly claiming this credit could result in taxpayers having to repay the credit along with potential penalties and interest,” Werfel said.

To claim the ERC, businesses need to understand the eligibility requirements before filing a claim. The IRS notes that eligible taxpayers can claim the ERC on an original or amended employment tax return for qualified wages paid between March 13, 2020 and Dec. 31, 2021.

However, employers must meet certain requirements, including a full or partial suspension of operations due to government-mandated COVID-19 restrictions, a significant decline in gross receipts, and qualifying as a recovery startup business.