By Karen Hube

Taxpayers, be vigilant: Scammers are on the prowl, emboldened by a climate of uncertainty.

Tactics to steal your money have spiked recently and they are getting increasingly sophisticated and difficult to detect.

In January alone this year, some 3,500 fraudulent IRS websites were created to dupe taxpayers into supplying personal information or making payments, "and we've seen almost a 700% increase in traffic on suspicious tax-related domains," says Mark Friedlich, vice president of government affairs at Wolters Kluwer and a longtime advisor to the IRS.

Fake websites are just one tool scammers use. Phone calls, texts, emails and social media posts by criminals impersonating IRS agents or tax preparers aim to get taxpayers to send money or share their Social Security numbers.

With personal information in hand, swindlers steal taxpayers' identities, file tax returns and pocket refunds.

It isn't just taxpayers who are targeted. Criminals trick accountants or employers, get into their systems, and steal sensitive information.

One scam that has spiked this year: Swindlers use AI to replicate the way a company's CEO communicates, then send an email to the firm's human resources department requesting a list of employees and their Form W-2s to prepare for an audit, says John Wilson, senior fellow of threat research at the cybersecurity company Fortra.

"The information is used to file tax returns and claim refunds, hoping to beat the taxpayers to the punch," Wilson says. "When the real taxpayer files later, the IRS says, 'Oh no, you already filed a tax return.'"

While tax season is always a prime time for tax crooks, periods of transition and uncertainty have historically triggered a spike in activity, says Eva Velasquez, CEO of the Identity Theft Resource Center.

As executive orders and ideas for changes roll out of the White House at a rapid pace under the Trump administration, it's easier for bad actors to convince taxpayers they need to act quickly to snag supposed new opportunities.

Velasquez points to the recent idea of Department of Government Efficiency (DOGE) stimulus checks as an example of an opportunity for scammers.

In February, Trump floated the idea of DOGE sending $5,000 checks to individuals to share savings from federal cost-cutting measures.

"When people get a phone call or a text message from a supposed preparer saying, 'Hey, do you want to take advantage of the DOGE dividend,' they've caught wind of it already, but they don't know it's not a real opportunity," Velasquez says.

Another scam stems from an IRS announcement in December that it would issue $1,400 payments to taxpayers who were eligible but didn't claim 2021 recovery rebate credits, which were part of pandemic-related economic stimulus.

"Bad actors send text messages pretending to be from the IRS, promising the $1,400," Friedlich says. "They aim to steal personal information and money from individuals."

Your information is also at risk sitting in a tax preparer's computer, Wilson says.

"Something we're seeing a lot of is a scammer sending an email to an accountant, claiming they want to be a new client," Wilson says. "There's usually a good back story, like the tax pro they usually use was impacted by the Palisades fire."

The scammer will ask if they can email their last year's return to get a quote for services. "But what they send is really malware that gives remote control to the preparers' computer and clients' information," Wilson says.

For identity theft victims, resolving cases can be a massive headache: Recouping refunds takes an average of 22 months, according to the Taxpayer Advocate Service.

When it suspects fraud, the IRS holds returns and freezes refunds, but half are falsely identified as fraudulent, according to the Taxpayer Advocate. In 2024, four weeks into the tax season, 1.9 million returns claiming refunds of $16.5 billion were held pending identity verification, according to the Treasury Inspector General for Tax Administration.

Taxpayers often must verify identities at IRS walk-in offices, but many are closing under DOGE cuts. Of 360 taxpayer assistance offices, 113 are getting shuttered.

"How will people reach IRS offices? It's going to be a nightmare," Friedlich says.

Meanwhile, taxpayer defenses could be eroding at the IRS.

The IRS started improving fraud detection technology with funds provided under the 2022 Inflation Reduction Act. But modernization efforts were paused in March, and last week the DOGE ax fell on 50 IRS information technology leaders working on artificial-intelligence-enabled fraud detection.

While 7,000 IRS workers fired in February can now take their jobs back under a federal court ruling, the 50 fired technology workers aren't part of the rehiring order, according to a source close to the matter.

Meanwhile, the IRS's annual budget for modernization has been zeroed out, and IRA funds allocated for technology upgrades are likely to be depleted by next year, says Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center. "Modernization was looking grim even before the pause was announced," she says.

The White House, asked about the pause in modernization and closure of IRS offices, said: "President Trump has made it clear that he is committed to making the federal government more efficient without compromising mission-critical operations. There will be no disruptions to service."

How can you protect yourself? Assume any text, phone call or email that purports to be from the IRS is a scam. The IRS always initiates communication through the U.S. Postal Service.

If someone contacts you claiming to be a tax preparer, check credentials. You can use the IRS's directory of federal tax return preparers on the agency's website ( https://irs.treasury.gov/rpo/rpo.jsf)

Finally, request a personal identification number $(PIN.UK)$ from the IRS. Your return will then only be accepted by the IRS with the PIN. "You have to get a PIN reissued each year," Wilson says. "But I assure you, you'd much rather do that than have the IRS say you already filed your tax return, when you actually haven't."

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April 05, 2025 04:00 ET (08:00 GMT)

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