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With the deadline for filing income taxes rapidly approaching, financial experts are cautioning taxpayers against waiting until the last minute, highlighting potential increased risks and costs. Hastening the annual tax filing process as the deadline nears elevates the chances of costly errors. Furthermore, taxpayers become more susceptible to tax season scams and fraudulent attempts aimed at stealing refunds and personal data.
Heightened Alert for Tax Scams This Filing Season
Federal authorities, including the FBI, are issuing alerts regarding the escalating threat of criminals pilfering taxpayer identities to file fabricated returns and illicitly claim refunds. The FBI’s Internet Crime Complaint Center (IC3) reported over a thousand such complaints in the past year alone, signaling a significant 26% surge compared to the preceding period.
AI-Driven Scams on the Rise
While vigilance against tax scams has long been necessary, cybersecurity experts emphasize a growing danger as scammers increasingly leverage artificial intelligence (AI) to amplify the scale and sophistication of their deceptive practices.
“Social engineering scams are becoming alarmingly realistic and convincing,” stated Abhishek Karnik, head of threat research at McAfee.
Illustratively, individuals might receive phone solicitations from imposters posing as IRS agents, employing seemingly authentic American accents. However, these perpetrators often operate from overseas, potentially masking non-native English accents through technological manipulation.
AI tools empower scammers to modify their voices and speech patterns, enhancing their persuasiveness and rendering previously detectable scams considerably more perilous, according to Karnik.
Survey data underscores the escalating impact, with nearly 25% of respondents in a recent McAfee poll reporting personal or vicarious financial losses due to tax scams. A significant majority, 87%, voiced concern about AI’s role in generating more pervasive and credible fraudulent communications.
Current AI-generated scam attempts predominantly manifest as pre-recorded phone calls. However, Karnik anticipates the imminent emergence of even more deceptive real-time audio and video deepfakes, further complicating scam detection.
Simultaneously, scammers are deploying AI to accelerate the dissemination of fraudulent text and email messages, often impersonating the IRS or reputable tax software providers like TurboTax and H&R Block.
These deceptive messages redirect victims to counterfeit websites designed to extract financial information and sensitive personal data, rather than legitimate platforms. Karnik further cautioned that victims risk malware infection by inadvertently downloading bogus tax preparation software.
Truman Kain, a security researcher at Huntress, highlighted a developing tax scam exploiting the IRS’s December announcement regarding pending stimulus payments. Scammers are capitalizing on public awareness of these payments to deceive individuals.
Kain explained, “Scammers are exploiting the anticipation surrounding potential eligibility for these payments, dispatching spurious IRS texts to pilfer personal information.”
Despite the IRS having already disbursed the majority of these payments automatically to eligible recipients, scammers continue to propagate false claims.
Links embedded in these fraudulent text messages typically lead to sham IRS websites engineered to harvest personal information, including Social Security numbers and banking credentials.
“This constitutes a complete toolkit for executing full-scale identity theft,” Kain warned.
Compounding the threat, stolen information facilitates the filing of fraudulent tax returns, enabling scammers to unlawfully seize victims’ legitimate refunds.
Protecting Yourself from Tax Scams
Despite the evolving sophistication of tax scams, experts assure that proactive measures can substantially mitigate risks. Employing caution and critical thinking remains paramount.
Keyι² Scam Prevention Tips
Stay Calm Under Pressure
Recognizing that tax season inherently induces stress, scammers deliberately exploit this vulnerability by imbuing their communications with a false sense of urgency. Threatening immediate repercussions such as refund forfeiture or imprisonment for non-compliance are typical tactics. Karnik emphasizes that such demands are conspicuous warning signs.
File Taxes Promptly
According to Kain, the IRS processes returns on a first-received basis. Expediting tax filing minimizes the window of opportunity for cybercriminals to exploit personal data for fraudulent purposes. Taxpayers requiring additional time canη³θ―· for filing extensions.
Be Vigilant Against Phishing and Smishing
The IRS unequivocally does not initiate unsolicited communications via email or text message. Exercise caution by circumventing embedded links and attachments, instead navigating directly to official IRS websites or relevant state and municipal governmental platforms. Refrain from responding to communications originating from unknown senders and strictly avoid opening attachments or divulging personal details like Social Security numbers or tax identification numbers.
Scrutinize Payment Requests
Be wary of demands for tax payments via unconventional methods such as cashier’s checks, wire transfers, gift cards, or cryptocurrency. Karnik confirms that the IRS does not endorse these payment modalities.
Verify Service Providers
For individuals utilizing online tax preparation software, ensuring the legitimacy of the chosen service and website is crucial. When engaging professional tax preparers, diligently verify their credentials and qualifications through resources like the IRS Directory of Federal Tax Return Preparers.
Obtain an Identity Protection PIN (IP PIN)
Taxpayers capable of verifying their identities with the IRS can procure an IP PIN, a six-digit code designed to thwart fraudulent return filings using their Social Security number. Kain strongly recommends this measure, particularly for past fraud victims.
Employ Robust Security Practices
Strong, unique passwords and two-factor authentication (2FA) are indispensable security measures for all accounts associated with tax returns and related documents. Maintain updated antivirus software and operating systems. Regularly back up tax information to secure removable drives or encrypted cloud storage, and ensure secure physical storage for paper copies and storage devices.
Properly Destroy Documents
Ensure secure disposal of obsolete tax documents through shredding to prevent potential data breaches via methods like dumpster diving. Avoid casual disposal in trash or recycling bins.
Respond Decisively If Compromised
In the event of suspected identity theft through fraudulent tax filings, promptly submit a paper return accompanied by Form 14039 (Identity Theft Affidavit). Report the incident to local law enforcement and the Federal Trade Commission (FTC). Vigilantly monitor credit reports and account statements, and proactively request credit freezes from all three major credit bureaus to prevent unauthorized credit applications.
Report Suspected Tax Fraud
Tax-related scams can be reported to various agencies, including the IRS, FBI, FTC, Better Business Bureau (BBB), and the Identity Theft Resource Center (ITRC).