Experts Warn of 12 Common Tax Scams as Tax Season Approaches

Michael Moore, CIO at Next Perimeter, warns of tax scams. He advises taxpayers to verify tax professionals, avoid unsolicited contacts, file early, and use IRS-approved services to prevent financial fraud during the tax season.

As tax season begins, cybersecurity and financial experts are urging taxpayers to remain vigilant against fraudulent schemes that target individuals and businesses. Reports indicate that fraudsters are increasingly using sophisticated tactics to deceive taxpayers, steal personal information, and commit financial crimes.

In 2024 alone, the Internal Revenue Service (IRS) reported over $9.1 billion in financial fraud cases linked to tax-related scams. Michael Moore, Chief Information Officer at Next Perimeter, a leading cloud-first cybersecurity company, highlights twelve prevalent scams and provides essential guidance on how to avoid them.

Michael Moore of Next Perimeter advises taxpayers to stay vigilant and adopt preventive measures against scams. He warns that fraudsters exploit the stress and urgency of tax season to deceive people.

“During tax season, scammers know people are stressed, rushing to file, and more likely to fall for a well-timed trick. The best way to protect yourself? Slow down and stay skeptical. The IRS isn’t going to call you demanding immediate payment, and they definitely won’t text you a link to ‘fix an error’ on your return. If someone is pressuring you to act fast, that’s your cue to step back and verify before doing anything,” he explains.

To enhance security, he recommends filing taxes early to prevent fraudulent filings, using strong passwords for tax software, enabling two-factor authentication, and obtaining an IRS Identity Protection PIN.

“If you’re working with a tax preparer, don’t just go with whoever promises the biggest refund. Check their credentials, ask questions, and make sure they sign your return—ghost preparers love to disappear when trouble arises,” he advises.

Most common tax scams identified

Tax scams come in different forms, targeting individuals through fraudulent preparers, misleading refund promises, and impersonation of tax authorities. Below are the 12 most common scams that taxpayers should be wary of:

Fraudulent tax preparers

Some fraudsters pose as tax professionals, preparing returns with false information to secure inflated refunds. Known as ‘phantom tax preparers,’ these scammers avoid signing returns and disappear after receiving their fees.

How to Avoid It: Taxpayers should only use preparers listed in the IRS directory and verify their credentials, ensuring they sign the return with a valid Preparer Tax Identification Number (PTIN).

Fake IRS calls demanding payment

Scammers posing as IRS agents contact taxpayers, falsely claiming they owe unpaid taxes. They threaten immediate arrest, asset seizure, or deportation to pressure individuals into making urgent payments.

"If you don’t pay right now, you’ll face immediate arrest, deportation, or asset seizure. “Sounds terrifying, right?” says Michael. “That’s exactly the point.”

How to Avoid It: The IRS does not demand immediate payment over the phone. If such calls are received, individuals should hang up and contact the IRS directly through official channels.

Inflated refund offers

Fraudsters promise unusually high refunds to lure taxpayers into fraudulent schemes. They may charge an upfront fee or file false returns, leaving victims liable for financial penalties.

How to Avoid It: Any tax preparer guaranteeing excessive refunds should be avoided. Taxpayers should review their returns before submission and rely on reputable professionals.

Phishing and smishing attacks

Scammers send fraudulent emails or text messages pretending to be from the IRS, requesting personal information such as Social Security numbers or banking details.

“This is a scam designed to steal your Social Security number and bank details,” warns Michael. 

How to Avoid It: The IRS does not initiate contact via email, text, or social media. Taxpayers should delete such messages and avoid clicking on unknown links.

Fake IRS websites

Fraudsters create counterfeit IRS websites to deceive taxpayers into providing sensitive information. These sites closely resemble the official IRS website, misleading unsuspecting individuals.

How to Avoid It: Taxpayers should directly visit www.irs.gov instead of using email links. All IRS communication should be verified through official contact methods.

“Always type www.irs.gov directly into your browser instead of clicking on links in emails,” says Michael. “Verify any IRS correspondence by contacting them directly.”

Fraudulent charity solicitations

Scammers establish fake charities, particularly after disasters, persuading individuals to donate under the guise of tax deductions. The funds, however, do not reach legitimate charitable causes.

How to Avoid It: Before donating, taxpayers should verify charities through the IRS Tax Exempt Organisation Search. Requests for donations in cash or gift cards should be approached with caution.

Social media tax ‘Hacks’

Social media platforms often feature viral tax tips that promise large refunds using questionable methods. These fraudulent strategies frequently involve falsifying tax information.

“TikTok and Facebook are flooded with viral tax “hacks” promising huge refunds with minimal effort,” says Michael. “However, these so-called hacks often involve shady tax credits or outright fraud.”

How to Avoid It: Only tax advice from verified professionals should be trusted. Misleading social media tax strategies should be ignored.

Fake taxpayer assistance services

Scammers impersonate IRS representatives, offering to assist taxpayers in setting up IRS accounts. Instead, they gain access to tax refunds and personal data.

How to Avoid It: Individuals should personally create IRS accounts at irs.gov and never share login credentials with third parties.

Tax-related identity theft

Fraudsters file tax returns using stolen identities to claim refunds before the legitimate taxpayer can submit their return. Victims often face delays and financial losses.

“This type of tax-related identity theft can take months to resolve, so it’s crucial to avoid it,” says Michael. 

How to Avoid It: Filing taxes early reduces the risk of identity theft. Taxpayers should also enrol in the IRS Identity Protection PIN (IP PIN) program and monitor their credit reports.

Fraudulent tax debt relief services

"Some scammers promise to help you settle tax debt for pennies on the dollar—after you pay them a hefty fee, of course. “In reality, they take your money and vanish,” says Michael.

How to Avoid It: The IRS offers real tax relief programs without requiring upfront payments. Only IRS-approved tax relief services should be considered.

Trust and tax shelter fraud

Scammers persuade taxpayers to move their assets into fraudulent tax shelters, claiming it will eliminate their tax obligations. Such actions can result in legal consequences.

“They might use any of the tactics outlined above, relying on intimidation tactics and misunderstandings to get what they want,” says Michael. 

How to Avoid It: Taxpayers should consult verified professionals before engaging in any tax-related financial planning. Unfamiliar financial schemes should be avoided.