Cyber criminals take advantage of the stress and anxiety consumers feel as they get close to the deadline for filing taxes, which is why tax scams are an easy score for them.
Since most people pay attention to an email or call that is allegedly from the IRS, especially if there is an overdue filing or a pending penalty, scammers can lure in victims easily.
DON'T MISS: Fraudsters Prepped With Scams for Tax Season
Tax scams are basically "guaranteed income for cyber criminals each year because no one wants to be on the IRS’s radar, Chris Pierson, CEO of BlackCloak, an Orlando, Florida-based digital executive protection company, told TheStreet.
These are some of the common tax scams committed by cyber criminals.
Posing As IRS Agents
People often feel a sense of urgency to respond to an email, text message or phone call that appears to come from the IRS despite their suspicions.
"Hackers count on people responding emotionally to their phishing messages, as this clouds their thinking and they don’t pay attention to subtle warning signs," he said
Fraudsters are not afraid to threaten people with the potential of being arrested. Cyber criminals prey on the fear and can often successfully lure victims.
"The scammer pretends to be an employee from the IRS and proceeds to tell the person that they either owe money in taxes or that they need to provide information in order for the IRS to update their records," Pierson said.
Scammers "feed off of basic human emotions like fear, anxiety, greed and sympathy," Jason Glassberg, co-founder of Casaba Security, a Redmond, Washington-based ethical hacking company, told TheStreet. "I think it’s well established that the IRS is one of the most dreaded government agencies for regular consumers."
Tax Filing Identity Theft
Cyber criminals use this stress, especially people who are not ready to file their taxes or owe large amounts, to trick consumers into doing foolish things like clicking a questionable link or sending payments via gift cards.
"Since many are afraid that they may have made a mistake in their tax filings or owe money, it’s pretty easy for a scammer to pull off an attack by spoofing an IRS email or phone number to convince the victim they need to make an urgent payment.
Fraudsters often persuade people to participate in their scams by email phishing, text message “smishing” and phone call “vishing.”
"A scammer may just want your Social Security number and other information to steal your tax return or they may want to steal your identity to take out a loan," Alex Hamerstone, advisory solutions director at TrustedSec, a Fairlawn, Ohio-based ethical hacking and cyber incident response company, told TheStreet.
Tax forms contain so much personal information and are a goldmine for criminals.
"Your tax return often has all the information a scammer would need to take out loans in your name, sign up for services, and access your accounts," he said.
Tax filing identity theft occurs when the criminal steals a person’s identity and then uses it to file a phony tax return and is one of the most common tax scams, Pierson said.
"Once this payment is processed, they are in receipt of funds the IRS thinks the victim has," he said
Some criminals take it a step further and allow the tax refund to be sent to the victim, but contacts them and tricks the person into sending the payment back to the criminal.
"This is usually done through a secondary scam in which the hacker pretends to be an IRS agent and claims that the return was sent in error or for the wrong amount," Pierson said.
Never Buy Gift Cards
The IRS will never ask anyone to pay a tax bill with gift cards, Hamerstone said. "Any time someone is asking you to buy gift cards and send them the codes, it is a scam."
Tax Refund Scams
Refund scams are also extremely common this time of year, Pierson said. Instead of stealing your money directly, the criminal is attempting to collect your personal information and financial information to commit fraud in the future.
The scam may involve multiple steps starting with a phone call followed by a phishing email or vice versa.
The ultimate goal of the scam is to get the victim to submit their personal information such as your social security or driver’s license number, date of birth, mailing address, and bank account information by sending a fake IRS web link or emailed form.
Recalculated or Cancelled Refund Scam
Tax scammers aren’t always after your money since your personal information can be more valuable.
In this scam the criminal sends a phishing email or text message to the victim and pretends to be an IRS employee, Glassberg said. This fake employee tells the consumer they are about to lose their refund or have it recalculated to a smaller amount due to insufficient or incorrect personal information on file.
The only way for the consumer to fix it is for them to provide more personal infromation via a web link.
"This link will take them to a malicious web page where the victim will be asked for their SSN, driver’s license number and birthdate – all the information a criminal needs to steal their identity and commit financial fraud," he said.
Another common scam is when the criminal sends the victim a real or phony tax refund payment, either using direct deposit or paper checks sent in the mail, Glassberg said,
"Believe it or not, sometimes the scammers will actually send you money," he said.
The criminal pretends to be an IRS agent, and claims that the payment was sent by accident or for the wrong amount and must be returned immediately.
"Scammers will put a lot of pressure on the victim to send the payment as quickly as possible, by warning them that they will face heavy fines or arrest if they don’t," Glassberg said.
This scam is successful because the criminal has filed a fake tax return for the victim and the deposit is a real refund from the IRS.
"To avoid red flags with the IRS, the criminal doesn’t change the victim’s bank account or mailing address when filing for the refund," he said.
"Once the payment goes out, they then trick the victim into sending it to them."
Your Mail Is Still a Goldmine
While a lot of ID theft is electronic, don't forget that mail theft is still a common way to steal information, Hamerstone said.
"It is always a good idea to take your mail inside the post office rather than to use a blue mailbox and to be careful with what you throw in the trash," he said.
Robocalls and Live Callers
Scam phone calls from robocalls and live callers are also very common during tax season, Hamerstone said.
These calls could be from fake IRS agents that attempt to “verify your information” or warn you about a pending fine or penalty.
"During tax season, we also see a lot of calls that claim the person’s social security number has been stolen and they need to verify their personal information to prevent fraud," he said.
Phone scammers try to scare taxpayers and want people to make a decision right away.
"They know the longer you think about it, the more likely you will realize you are being tricked," Hamerstone said.
The IRS only rarely contacts people by phone because almost all of their communications are done by mail.
"It is extremely easy to fake or 'spoof' a phone number on the caller ID," he said. ". People should never trust the phone number that is displayed on their screen."
