Tax Season is a Prime Time for Scams. IRS Uncertainty Could Add to the Issues This Year
The exterior of the Internal Revenue Service building in Washington, D.C.
Tax season presents both opportunities and risks, with the potential for scams at an all-time high. Cybersecurity experts are warning of potential increases in attacks due to recent workforce cuts at the IRS and the growing sophistication of scams.
As you prepare your tax return, which is due April 15th, vigilance is key. Fraudsters deploy various tactics throughout the year to steal your identity, money, and other sensitive information. However, with uncertainty stemming from recent workforce reductions at the U.S. Internal Revenue Service, scams may be more prevalent.
These budget cuts, which have impacted thousands of jobs, also raise concerns about the bandwidth the IRS has to respond to scams reported by consumers. Dave Chronister, a “ethical hacker” and CEO of Parameter Security, notes that scammers might take advantage of recent IRS cuts and impersonate the IRS to falsely promise taxpayers “new” ways of filing.
Identifying Tax Scams
Tax scammers employ various methods to reach you, including lookalike emails, texts, or phone calls impersonating the IRS. They might also use unsolicited social media offers that promise an unusually large refund. To protect yourself, be aware of common red flags:
- Sense of Urgency: Scammers will try to get you to act fast
- Isolation: They will try to prevent you from contacting outside help, like a trusted tax advisor or family member.
- Promises of a Big Payday: Scammers will lure you with promises of large refunds
- Suspicious Links: Never click on links you did not solicit
Cybersecurity experts stress that scammers manipulate your emotions, often trying to evoke fear or uncertainty to get you to respond quickly. They may threaten arrest if you don’t act, or they may promise big payouts, but at a price.
Some “ghost” preparers overcharge for preparing your tax return. They often promise a large refund but never sign the return. They then file a fraudulent return with an inflated income or fake deductions to increase the refund and change the bank account listed to claim your money.
The IRS will never initiate contact via email, text, or social media with requests for your personal information. The agency urges consumers to use trusted, accredited tax professionals when preparing your return. If you have fallen victim to a scam, report it to the IRS on their official website.
What’s Different This Year?
Experts are warning that cyber criminals or “social engineers” are likely to take advantage of the uncertainty surrounding IRS cuts. According to Chronister, uncertainty is a major emotion that social engineers exploit. He also notes that the IRS workforce cuts could slow the agency’s ability to actually respond to scams. Malicious websites or predatory social media campaigns may not be taken down as quickly and victims of fraudulent returns may have to wait longer for answers.
Chris Pierson, chief executive of cybersecurity firm BlackCloak, warned of the potential for reduced oversight. He stated, “If you have less individuals to be proactive within an agency that is housing, I mean, an amazing treasure trove of data and information — that obviously is concerning … (and could) create a riskier environment for the consumer.”
Scams are becoming more sophisticated, and are now using generative artificial intelligence. Experts warn that this technology is being used to create “hyper-realistic” phishing messages (including video and audio deepfakes) and can allow scammers to target more people at once through automation.
Pierson also warns of the fallout from high-profile data breaches, including the National Public Data breach, which reportedly made a massive amount of sensitive information available on the dark web, including full names, social security numbers, contact information, and mailing addresses. According to Pierson, this information could lead to more fraudulent filings or “confidence scams,”- where cybercriminals share one piece of information (like an address) to get people to trust them.”
How to Protect Your Information and Money
To protect yourself from tax scams, the following steps are recommended:
- File Early: Filing your taxes as early as possible helps.
- Stick to What You Know: Continue to use familiar tax preparation software or work with your trusted accountant this year.
- Protect Your Information: Password-protect any past filings downloaded to your device and use a VPN when on public Wi-Fi.
The IRS also suggests setting up an identity protection PIN, a six-digit number that can protect you from someone else filing in your name. Additionally, freezing your credit is an added line of defense, even if you haven’t been scammed. A credit freeze prevents new credit accounts from being created in your name. The IRS will not randomly contact you by email, text, or phone. When in doubt, utilize the official IRS website.
According to Chronister, avoiding scams can also come down to pausing before you act. He says, “Take a breath, count to 10, and then go, ‘OK … is this too good to be true?’ ‘Is my gut telling me something is off?’” He adds that social engineering is about emotion and that anyone can fall for a scam, no matter how intelligent they are.
