How to Spot Tax Scams and Protect Yourself from Falling Victim

Tax scams are becoming increasingly sophisticated, targeting unsuspecting individuals with tactics designed to exploit fear, urgency, and confusion. These scams range from phishing emails to fraudulent phone calls, all designed to trick you into handing over sensitive personal and financial information. Unfortunately, their impact is massive—the IRS reported a staggering $5.5 billion loss to tax scams in 2023 alone showing that tax scam is a “serious business”.

But here’s the silver lining: most tax scams share a predictable pattern, and the warning signs are easy to spot if you know what to look for. Scammers rely on your lack of awareness to succeed, which is why identifying their tricks early can save you from serious consequences, including financial losses and identity theft.

In this article, we’ll break down the most common red flags of tax scams, from unsolicited IRS notices to suspicious W-2 forms. By the end, you’ll not only know how to recognize these schemes but also what steps to take if you encounter any of these tell-tale signs. Staying informed is your first and best line of defense!

5 Tell-Tale Signs That You’re Being Tax Scammed

1. Unsolicited IRS Tax Transcripts in the Mail

If you receive a tax transcript from the IRS that you didn’t request, alarm bells should go off. Scammers often use this tactic to make their fraudulent schemes appear legitimate. The IRS typically only sends transcripts when requested, so unsolicited ones are a major red flag.

2. An Employer Identification Number You Didn’t Request

Did an Employer Identification Number (EIN) land in your mailbox out of the blue? Scammers may use stolen personal information to apply for an EIN in your name to commit tax fraud. If this happens, don’t ignore it—act immediately.

3. A W-2 from an Unknown Employer

Receiving a Form W-2 from a company you’ve never worked for is a classic sign of identity theft. Scammers might be using your information to create false tax returns. Always double-check your records and report any discrepancies.

Also Read: Should you give a babysitter 1099 or a W-2? Read to find out.

4. Suspicious Emails from Tax Preparation Companies

An email or notice from a tax prep company asking you to confirm, disable, or verify an online account is a major red flag. Scammers use these messages to gain access to your personal or financial data. Legitimate companies won’t ask you to click links or share sensitive information through email.

5. Unexpected IRS Letters Claiming You Owe Taxes

Receiving a letter from the IRS during a year you didn’t earn income or file a return is another warning sign. These letters may claim:

• You owe additional taxes.
• A refund was offset to cover a balance due.
• Collection actions were taken against you.

If you’re unsure about the letter’s authenticity, verify any tax liabilities directly on the IRS website under your Online Account. Don’t click on links or respond to the sender.

How to Stay Safe from Tax Scams

1. Verify Tax Bills Through Your IRS Online Account

The IRS sends paper bills in the mail first and won’t demand immediate payment via email, text, or phone. You can always log into your secure IRS Online Account to check your tax obligations.

2. Get an IRS Identity Protection PIN (IP PIN)

An Identity Protection PIN (IP PIN) adds an extra layer of security to your tax account. This six-digit PIN ensures that no one can file a return using your Social Security number without it. Once enrolled, the IRS will issue a new PIN each year automatically. Learn how to get one using the IRS online tool.

3. Create a Personal IRS Online Account

Scammers may try to create an IRS Online Account using your information before you do. Beat them to it by setting up your own account. It only takes 5–10 minutes and locks scammers out for good.

What to Do If You Encounter a Tax Scam

Report Phishing Scams

If you receive suspicious IRS, Treasury, or tax-related phishing emails:

• Forward them to phishing@irs.gov without clicking links or opening attachments.

Report IRS Impersonation Phone Calls

Received a phone call claiming to be from the IRS? If you don’t owe taxes, hang up and report it to the Treasury Inspector General for Tax Administration (TIGTA).

• Include the caller ID and callback number in an email to phishing@irs.gov with the subject line “IRS Phone Scam.”

Final Thoughts Protect Yourself Today

Tax scammers thrive on fear and confusion, but knowledge is your greatest defense. By staying vigilant, verifying all communication directly with the IRS, and using tools like the IP PIN and IRS Online Account, you can outsmart these fraudsters.

Don’t let scammers get the upper hand—take control of your tax security now!