Holiday Scams: IRS Releases Common Identity Theft Schemes, Precautions for Shoppers

A sign outside the Internal Revenue Service building is seen in Washington, on May 4, 2021. Patrick Semansky/AP Photo

The Internal Revenue Service (IRS) warned taxpayers to watch out for “a surge of tax scams” ahead of the holiday and tax season as criminals attempt to steal personal identities.

“As the holidays and tax season approach, this special week highlights that we are entering a period where taxpayers need to be extra careful protecting their sensitive financial and personal information,” said IRS Commissioner Danny Werfel, according to a Nov. 27 press release. The agency advised taxpayers to avoid shopping on “unsecured public Wi-Fi” like in a mall or a restaurant and to protect the devices of their family members, including children, elders, and less tech-savvy individuals.

The tax agency recommended people use multi-factor authentication when online as it “helps prevent thieves from easily hacking accounts.”

“The IRS also reminds the tax community that the Federal Trade Commission this summer updated their standards and now requires tax professionals to use multi-factor authentication to protect information.”

Many of the latest email scams focus on the third round of the Economic Impact Payments (EIP), the agency stated. The IRS is seeing “complaints daily about this scam, which has an embedded URL link that takes people to a phishing website to steal sensitive taxpayer information.”

EIP was a coronavirus relief package that provided financial aid to qualified Americans amid the pandemic. The IRS has issued all three rounds of EIP payments. However, individuals who missed this benefit in 2021 may still be eligible to get them, which can make such people vulnerable to scammers.

“Identity thieves are looking for ways to play the Grinch and steal taxpayer information that can help them steal identities and file fraudulent tax returns,” Mr. Werfel said. This can later be used to claim the victim’s tax refunds.

The agency is also getting reports of emails urging Americans to “Claim your tax refund online” and text messages insisting that something was wrong with their tax return.

IRS pointed out that these scams are usually riddled with spelling errors and contain awkward phrasing. Despite these flaws, the emails constantly attempt to make people click a link. It asked people not to click links that seemed suspicious. Taxpayers can report such scams to [email protected].

“With holiday season approaching, the IRS reminds people to be careful of gift card scams that can involve taxes,” the agency said. “Never buy anything from online sellers that accept payment only by gift cards, money transfers through companies like Western Union, MoneyGram, or cryptocurrency.”

“Payments made that way are nearly impossible to trace and reverse. Scammers commonly tell people to use those payment methods to pay tax bills so they can get money quickly.”

Being Safe Online

To protect themselves online, the IRS asked taxpayers to only shop at websites that begin with “https” in their URLs and display a padlock icon in the browser window. The “s” in “https” stands for secure communications.

Security software of devices like computers and smartphones must be updated. The device should have a firewall enabled to prevent intrusions, and the anti-virus software should have a feature to stop malware, the IRS stated.

Given the rise in texting scams, the IRS advised taxpayers to look into security recommendations for their specific mobile phones by using the Federal Communications Commission’s “Smartphone Security Checker.”

The tool provides security recommendations for four mobile operating systems—Android, Apple iOS, BlackBerry, and Windows Phone.

The IRS put forward the following measures to prevent potential identity theft:

• Using separate personal and business devices as well as email accounts.
• Avoid sending sensitive business information to personal email devices.
• Never connect an unknown or untrusted piece of hardware to the system.
• Changing passwords regularly, at least once every three months.
• Avoiding reuse of passwords on devices and applications containing business information.

Scams Targeting Americans

IRS’ warning about holiday scams comes as the agency issued several similar alerts in recent times. In July, the tax agency issued an “extra caution” warning about multiple scams involving tax refunds and pandemic-related payment schemes seeking to defraud taxpayers and illegally obtain sensitive information.

The EIP scam was reported to be the “highest volume email scheme the IRS is seeing,” the agency said in a July 21 press release.

At the time, the IRS was seeing hundreds of taxpayers forwarding emails related to this scam each day, with thousands of such emails reported since the July 4 holiday.

“People are being flooded with these email and text messages, but we want them to avoid getting swept up in these terrible scams. Taxpayers should be wary; remember, don’t click on links from questionable sources,” Mr. Werfel said.

The IRS also warned about a mail scam that attempted to trick people into believing that the government owes them money. In this scam, the criminals send a letter with the IRS’ masthead, writing about an “unclaimed refund.”

In order to claim this refund, the letter asks targets to divulge their sensitive personal information, including detailed driver’s license info. Once fraudsters obtain the data, they use it to secure tax refunds on behalf of the individual.

A few days back, the IRS warned about charity scams targeting Americans. “If you answer a charity’s call for help, consider contributing by check or credit card, not cash. #IRS urges you to stay alert and check that you’re donating to legitimate charities,” the agency said in a Nov. 21 X post.

The IRS asked people to use its “tax exempt organization search tool” to verify the identity of an organization’s eligibility to receive tax-deductible charitable contributions.