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Illustration of tax documents, phone calculator and magnifying glass. "Fraud"...
Category: Fraud Prevention

4 Common Tax Fraud Scams

Protect your business during tax season by understanding some of the most common schemes.

By Doug Segrest | January 14, 2025

It’s that time of year: tax season.

Millions of taxpayers, both consumers and businesses, are actively gathering their receipts, W-2s, and other documentation to complete their 2024 tax returns.

It’s also a time to make sure you keep fraudsters at bay. For criminals, tax season is a golden time to attempt to steal your information – or your tax return.

One of the most common ways is through impersonation and urgent demands. Remember, “The IRS will not request personal or financial information by email, text, letter or social media.”

“That’s straight from the IRS website,” said Jeff Taylor, head of Commercial Fraud Forensics at Regions Bank. “If the IRS has a question regarding a return, it will contact you through regular mail.”

Take a few minutes to familiarize yourself with the most scene schemes.

 

4 Common Tax Fraud Scams

    1. Executive impersonation –In this scam, the fraudster poses as a company executive requesting a list of employees or a file containing the W-2 information for employees. Complying and providing this information will likely result in the compromise of the personal data of your employees and enable the fraudster to perpetrate identity theft.
    2. IRS impersonation – Fraudsters, posing as IRS employees or investigators, alert a taxpayer of a potential error in their return or an offer to recalculate the return for a larger refund, and convince the taxpayer to provide personal and private information – such as their social security number, user ID and password to the irs.gov website, bank account information or a copy of their tax forms.
    3. Advanced Payment scam – In return for personal information or a fee, the fraudster offers early or advanced access to the tax return. There are certainly legitimate businesses that offer advanced access to funds for a fee, so thoroughly investigate the source before providing any information.
    4. Tax Preparers, Advisors or Advocates – Choose your tax return preparer carefully. Even though most tax return preparers provide honest, quality service, some may cause harm through fraud, identity theft, and other scams. The IRS Taxpayer Advocate Service does not randomly contact taxpayers. Taxpayers reach out to the service first and are then contacted by an agent.

 

Now, you know what to look for. In the meantime, remember this:

 

The IRS Will Never

  • Call to demand immediate payment using a specific payment method, such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
  • Threaten to immediately bring in local police or other law enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving taxpayers the opportunity to question or appeal the amount owed.
  • Call unexpectedly about a tax refund.
  • Leave prerecorded, urgent or threatening messages. In many variations of the phone scam, victims are told if they do not call back, a warrant will be issued for their arrest. Other verbal threats include law-enforcement agency intervention, deportation or revocation of licenses.

 

“Criminals will go so far as faking or ‘spoofing’ by creating caller ID numbers that appear to be legitimate – and even from an IRS office,” Taylor said. “Fraudsters also spoof other government agencies, including law enforcement and the department of motor vehicles.”

 

3 Steps to Take if You Receive a Fraudulent Call

    1. Record the number and then hang up the phone immediately.
    2. Report the call to TIGTA (U.S. Treasury Inspector General for Tax Administration) using this link: (https://www.tigta.gov/hotline).
    3. Report the number to [email protected] and be sure to put “IRS Phone Scam” in the subject line.

 

“The best way to avoid scams is to be fraud aware and stay educated on the potential fraud schemes being used today,” Taylor said. “Perpetrators of tax fraud typically prey on stress, confusion and fear. Criminals know that filing taxes can be complicated and a stressed individual may be more likely to fall for one of these scams. It adds up to a perfect environment for scammers.”

 

Related Articles from Doing More Today:

  • Tax Fraud Scams: 6 Tips to Stay Safe
  • The IRS’ 4 Steps to Take After a Data Breach
  • 4 Warning Signs of a Potential Charity Scam
  • Social Security Number Breach: 3 Steps to Protect Your Information

 

The information presented is general in nature and should not be considered, legal, accounting or tax advice. Regions reminds its customers that they should be vigilant about fraud and security and that they are responsible for taking action to protect their computer systems. Fraud prevention requires a continuous review of your policies and practices, as the threat evolves daily. There is no guarantee that all fraudulent transactions will be prevented or that related financial losses will not occur. Visit regions.com/STOPFRAUD or speak with your Banker for further information on how you can help prevent fraud.
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