Cybersecurity Tips for Protecting Yourself Against IRS-Related Scams During Tax Season

Navigating tax season can be incredibly stressful, requiring us to undergo immense work to accurately report our finances and comply with complex requirements. Nowadays, most people use digital tools to simplify the process, with 93.8% of individual tax returns filed electronically for the 2022 fiscal year. However, this shift towards digital methods raises significant cybersecurity concerns. By exchanging such massive quantities of personally identifiable information online, people tend to sacrifice security for convenience. This leads to an increased risk of encountering IRS-related scams, highlighting the critical need for robust cybersecurity measures during this process. 

These frauds are a year-round concern, but bad actors intensify their attacks during tax season, exploiting the heightened sense of urgency around filing deadlines. This period, marked by increased communication and pressure, makes people more susceptible to mistakes, creating an ideal environment for scammers to deploy their deceptive tactics effectively. 

To reduce your risk, it's crucial to stay vigilant and informed. In the following sections, we delve into the most prevalent IRS-related scams, outline strategies for safeguarding yourself, and provide guidance on steps to take if you unfortunately become a victim, aiming to minimize the damage caused. 

Common Scams 

In an IRS-related fraud scheme, a malicious actor impersonates the Internal Revenue Service to obtain your personal information, employing tactics like phishing or smishing (smartphone phishing). These fraudsters craft messages containing malicious links, using sophisticated documents and professionally designed landing pages to enhance authenticity. Using social engineering, they craft messages that may: 

• Prompt you to collect unclaimed refunds, 

• Threaten legal action for alleged fraud, 

• Inquire about supposed unpaid fees, 

• Request verification of unusual account activity, etc. 

Once the link is clicked, it can be used to install malware or ransomware on your device. 

You may also receive phone calls from impersonators who leave vague, pre-recorded voicemails threatening your arrest if you don't immediately call back to provide payment. They may use spoofing technology to make them appear to be a legitimate government source. 

In other cases, these criminals may engage in tax filing fraud, using your social security number to file a fraudulent tax return and claim your refund. This is a huge issue, with the IRS identifying over one million tax returns as potential identity theft cases during the 2023 tax season.  

What are the red flags and warning signs? 

Be aware of subtle signs that might suggest you are dealing with an impersonator rather than the legitimate agency. These include: 

• Unsolicited documents like a tax transcript, an Employer Identification Number, or a W-2 from an unknown source. 

• Unexpected messages from a tax preparation service claiming to have represented you. 

• Aggressive calls or messages demanding specific payment methods, such as gift cards or wire transfers, for an alleged debt. These may also ask for personal information like credit card numbers over the phone – practices never used by the IRS! 

• Communications from unofficial or misspelled URL or email domains, or other grammatical errors in the content 

• Messages about unrealistic refunds or other far-fetched incentives 

For additional insights, our guide on identifying business email compromises offers valuable tips on recognizing phishing and other deceptive impersonation tactics. 

How can you protect your data from falling prey? 

You can implement various proactive measures to avoid these incidents, such as: 

• Use Strong Passwords: Implement strong, unique passwords and enable multi-factor authentication for all accounts. 

• Verify Communications: Avoid clicking links in unsolicited messages. Instead, directly visit the official website for any legitimate notices. Remember, the Internal Revenue Service primarily communicates through traditional mail, not text or email. 

• File Taxes Early: Submit your taxes promptly to prevent fraudsters from filing fraudulently in your name. 

• Consult Trusted Advisors: Work with reputable financial and tax advisors for tax preparation. 

• Obtain an Identity Protection Pin: This adds an extra layer of security to your account, as it's required for filing tax returns with your Social Security number or Individual Taxpayer Identification Number. 

• Verify Unknown Calls: If you receive a call from an unknown number claiming to be the IRS, hang up and call the official number to confirm its legitimacy. 

• Update Devices and Software: Regularly update your devices and software to close any security gaps that bad actors could exploit. 

Organizations can also help create a more secure business environment by adopting a zero-trust cybersecurity approach, which involves continuously validating users on your network to minimize unauthorized data access.  

What should you do if you fall victim? 

 If you suspect you may have been tricked into exposing your data and finances, you must act immediately to minimize potential damage.  

• Confirm and Report: After determining the unsolicited communication is fraudulent, report it to the appropriate authorities. You can find specific reporting methods for different types of schemes on the IRS website. 
• Notify Financial Institutions: If you made any payments during the interaction, inform your bank and/or credit card company immediately to secure your accounts. 
• Monitor Your Credit: Keep a close eye on your credit reports for signs of potential identity theft. Consider signing up for identity theft protection services for expert monitoring and assistance. 

Partner with designDATA to protect your data 

Falling victim to a scam can have devastating effects, including significant monetary losses, drained bank accounts, and a tarnished credit history. Such consequences can hinder your ability to rent a home, purchase a car, secure employment, and perform other essential activities. 

To prevent these outcomes, it's crucial to safeguard your personal information proactively. This means not only implementing the measures we have outlined in this article, but also staying informed about the latest IRS-related scams. Equally important is sharing this knowledge with your colleagues, friends, and family to foster a safer community for everyone.  

While personal vigilance plays a crucial role in safeguarding individual tax information, its principles are equally vital in the business world. The same attention to detail and proactive mindset are essential in protecting an organization's data. Partnering with a Managed Services Provider like designDATA can help you build a robust IT infrastructure that keeps your critical information and resources available and confidential. With our cybersecurity solutions, you can minimize disruptions in the workplace and empower your team to do their best work, securely.  

Learn how we can protect your organization from evolving cyber risks with an advanced multi-layered defense by getting in touch with us.