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Scammers who misrepresent themselves as IRS officials are an ongoing and evolving threat, and one that requires a degree of savvy to avoid. The key to combating this tax scam is understanding what the IRS can and cannot do and staying alert for any communications that ring false or make unauthorized requests for money or information.
How Does Tax Identity Theft Happen?
Tax identity theft takes several forms, but the objective is the same: To harness the power of the IRS to intimidate victims into giving up their money or personal information.
Specific ways tax identity fraud can appear include:
- Hijacked tax returns: A criminal submits a tax return using your identifying information and has your refund redirected to them. It's common to learn of this scam when you try to file your legitimate tax return, only to have the submission rejected on grounds that a return has already been filed using your Social Security number.
- Fake tax collection efforts: An official-seeming letter, email, phone call or (more rarely) personal visit from a purported IRS official says you owe taxes and will face immediate dire consequences (arrest, forfeiture of your car, etc.) unless you act right away. Follow-up instructions could demand payment via electronic transfer, money order or even prepaid credit cards.
- Identity intimidation: In the course of trying to bully you into making a bogus payment, scammers posing as IRS officials might ask for access to your bank account or for essential tax info such as your Social Security number or your online tax-filing PIN. In addition to stealing funds directly by using this information, thieves can use it to open bogus bank accounts and apply for loans or credit cards in your name.
Understanding IRS Methods
Social Security numbers are a frequent target of many fraudsters, and should be closely guarded under all circumstances. Their use in bogus tax returns is a regular focus of consumer warnings from the IRS—as are warnings about criminals impersonating the IRS over the phone, via email and even in person.
Criminals are continually updating their tactics, and the IRS updates its consumer alerts webpage accordingly. It's a good idea to familiarize yourself with the latest scams, as you can avoid many bogus IRS shakedowns if you understand what real IRS representatives do and don't do when they get in touch with taxpayers.
The IRS won't:
- Contact you by phone, email or in-person visit without first sending notice via postal mail—and the agency typically makes several attempts at mail contact before using other forms of communication.
- Suspend or cancel your Social Security number. Contrary to messages left in robocall voicemails, neither the IRS nor the Social Security Administration can do this. In addition, no legitimate phone communications or emails from any government agency will instruct you to enter your full Social Security number via phone keypad or submit it via an online form. If you receive a call purporting to be from the Social Security Administration, you can call the agency's official phone number (800-772-1213) to verify its legitimacy. Do not use your phone's "call back" option to return a message from Social Security, even if it appears to come from this phone number; scammers have been known to rig their calls to look as if they come from that number via a process known as spoofing.
- Threaten to involve local police, the FBI, immigration enforcement or other federal law enforcement agencies in its investigations.
The IRS will:
- Instruct you to set up a PIN code to access your account if you create a personal account for filing taxes online. That PIN is for your personal use only; IRS officials do not need it and will never ask you to divulge it.
- Request you to direct payments to the United States Treasury if attempting to collect payments. The agency does not accept payments in the form of prepaid debit cards, gift cards or wire transfers.
- Sometimes appear in person in connection with audit procedures. But IRS auditors never show up without sending prior notification of the audit by mail.
- Always present two forms of identification when they appear in person: a document known as a pocket commission and a government-standard personal-identity verification (PIV) card. IRS criminal investigators will also carry badges.
How to Report Tax Identity Fraud
If you're suspicious about any potentially fraudulent communication from the IRS, the agency suggests separate courses of action—one for individuals or couples who don't owe taxes and have no reason to think they do, and another for those who owe taxes (or don't know if they do) and want to be sure their payments are going where they belong.
Taxpayers who know they don't owe any taxes should report bogus attempts at collecting money as follows:
- Notify the Treasury Inspector General for Tax Administration.
- Report scammers' caller ID info and callback numbers to the IRS by sending an email to firstname.lastname@example.org with "IRS phone scam" in the subject line.
- Report the call to the Federal Trade Commission, including the phrase "IRS phone scam" somewhere in the description of the incident.
Taxpayers who owe taxes (or think they might) should do the following:
- View tax account information online at IRS.gov to see actual amounts owed and review payment options. If you have no tax obligation, follow the steps listed above for taxpayers who owe nothing.
- If you confirm that you owe taxes, check to see that the amount you owe matches the amount listed on any notice you receive purporting to be from the IRS. If the numbers don't align, the correspondence is likely bogus. Even if the numbers do match, you can still call the IRS at 800-829-1040 to verify that the notice you've received about a tax obligation is legitimate.
If you've become a victim of tax identity theft, the IRS recommends these actions:
- If your electronic income tax return is rejected because of a duplicate filing under your Social Security number, or if the IRS instructs you to do so for any other reason, fill out an Identity Theft Affidavit (IRS Form 14039) and submit it with a hard copy of your tax return.
- Visit IdentityTheft.gov for steps you should take right away to protect yourself and your financial accounts.
If you previously contacted the IRS about identity theft and your issue hasn't been resolved, call 800-908-4490 for special assistance.
How to Prevent Tax Identity Theft
The best defense against tax identity theft is to familiarize yourself with IRS communications methods and have the confidence to double-check even the most official-seeming communications anytime you're asked to provide payment or disclose account numbers or your Social Security number.
If in doubt, use the resources listed above to verify whether or not the correspondence you've received is really from the IRS. Recognize that scams are prevalent, train yourself to look and listen for the signs of fraud, and trust your instincts. If you're suspicious about any communications, check into it—and never give out your Social Security numbers, passwords or PINs.
A free credit freeze is an additional layer of protection that can help limit the damage to your credit in case a criminal gets hold of your personal information. It prevents access to your credit report at all three national credit bureaus (Experian, TransUnion and Equifax). A security freeze must be initiated at each bureau separately. Doing so will make it impossible for criminals to apply for loans or credit in your name.