In 2024, the Internal Revenue Service (IRS) reported nearly 300,000 identity theft cases, resulting in an estimated $5.5 billion in tax fraud. Through several sneaky scams, fraudsters will target taxpayers during tax season to steal their data, personal information, and refunds.

Four common tax scams to watch out for.

With fraudsters becoming savvier, it’s important to identify potential scams to help protect your finances and identity. Here are four malicious tactics you should be aware of.

1. Phishing emails or texts: ‘Phishing’ is when cybercriminals use scam emails or text messages to deceive their victims. These messages will often ask you to click on a link to “verify your refund” or send false threats of impending criminal prosecution for tax debt. Once you click on the link, fraudsters can download a virus onto your computer or steal bank details and other personal information.

2. Fake IRS phone calls: Fraudsters may call and try to trick unsuspecting taxpayers, often threatening or making alarming calls and posing as the IRS to obtain taxpayer money or personal information. Even though these calls may be intimidating and seem real, you should remember the IRS will never contact you via phone, email, or text.

3. Tax preparer fraud: Fraudulent preparers typically use deceptive tactics such as advertising guaranteed larger refunds than competitors or offering services without proper credentials. These scams could jeopardize your financial security and also lead to legal consequences if false information is filed under your name. To validate your tax preparer credentials, visit IRS.treasury.gov. Remember, if a deal sounds too good to be true, it is.

4. Fake refund scams: In these scams, fraudsters claim they can help you recover money you never received or claim you’re owed a large sum. They will often ask you to pay a “processing fee” first before offering their services. Eventually, stealing your money and sensitive personal information.

Five ways to protect yourself from tax scams.

Taking proactive steps to prevent yourself from falling victim is key to safeguarding your money and personal information. Here are five simple financial habits you can adopt.

1. Secure your personal information: To protect yourself from scams, you should:

• Use strong passwords when logging into accounts online.
• Never give out sensitive information.
• Implement multi-factor authentication.
• Monitor your credit reports regularly.

2. Never give out information to strangers: If you’re asked to provide sensitive financial or personal information over the phone or via email/text, you should always verify the legitimacy of the person or company first. You can hang up and call back using a trusted phone number found on a secure website.

3. Set up an Identity Protection (IP) PIN with the IRS: An IP PIN is a unique six-digit number that prevents unauthorized parties from filing a tax return using your Social Security number (SSN) or individual taxpayer identification number (ITIN). You can create an IP PIN by visiting IRS.gov.

4. Verify IRS communications: The IRS typically contacts you the first time via mail delivered by the U.S. Postal Service. If you want to verify the legitimacy of your IRS letter or notice, you can look it up on IRS.gov.

5. Monitor your financial accounts: Regularly checking your accounts can help you catch any unusual or suspicious activity. Additionally, some banks offer account alerts to notify you of account activity, from withdrawal alerts to possible fraud. These alerts allow you to access fast and reliable information about your account, helping you stay on top of your finances. 

What to do if you detect tax fraud. 

If you detect a potential tax scam, you should immediately contact your bank and the IRS. Reporting scams to the IRS allows investigators to use your information to build cases against fraudsters and more efficiently detect future fraud.

You can contact the IRS at 1-800-908-4490 for personalized support with identity theft concerns and assistance in resolving any tax account issues caused by fraud.

Additionally, if you feel you’re a victim of fraud, contact FirstBank’s 24-hour customer service line at 1-800-964-3444.

The bottom line.

Safeguarding sensitive information and actively monitoring your financial accounts is essential to detecting and preventing tax fraud. For more tips, visit our Fraud Prevention page at efirstbankblog.com.

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Published: March 26, 2025