Avoid Tax Scams: How to Stay Safe This Filing Season
Tax season is open season for cybercriminals, who continuously refine their scams to defraud individuals, single-family offices, and other businesses. Using increasingly sophisticated tactics — including phishing emails, phone scams, and artificial intelligence — fraudsters deceive unsuspecting taxpayers into revealing sensitive financial information or they may even file fraudulent tax returns on victims’ behalf. In 2024 alone, tax fraud cost Americans more than $9 billion, with the Internal Revenue Service (IRS) still investigating more than 500,000 open cases.
The ability to identify tax scams and understand how they operate is the first step in staying safe. We explore prevalent tax-related scams, how to identify warning signs, and essential steps you can take to safeguard your personal and financial information this tax season.
| Common Tax Scams | |
|---|---|
| Filing fraudulent tax returns | This type of tax fraud is particularly harmful, as it involves stealing personal information — such as Social Security numbers — to file fake tax returns. The goal of this scheme is to intercept tax refunds before victims submit their filings. Victims often remain unaware of the fraud until their legitimate tax filing is rejected, or they receive a notice from the IRS about a suspicious filing. |
| Making fake IRS phone calls | Scammers frequently impersonate IRS agents, calling victims and pressuring them to make immediate payments for supposed tax debts. These callers often employ fear tactics, threatening legal action, arrest, or wage garnishment if the victim does not comply. They may also spoof an IRS caller ID to appear more convincing. It is important to remember that the IRS does not initiate contact by phone, email, or text message. If you receive such a call, do not share any personal or financial information — hang up immediately. |
| Sending deceptive email and text scams | Phishing remains one of the most common and effective tools for cybercriminals, especially during tax season. These scams typically involve fraudulent emails, text messages, or websites that impersonate the IRS, tax preparers, or financial institutions. They often contain urgent messages about tax refunds, overdue payments, or suspicious activity. Look out for prompts to click on malicious links or provide sensitive information, such as usernames and passwords. Once obtained, this data can be used to commit identity theft or access financial accounts. Be wary of unsolicited messages requesting personal details and avoid clicking on links from unknown or suspicious senders. Validate any tax communication you receive by directly looking up information on the official IRS website or contacting your tax preparer |
How to Protect Yourself
Obtain an Identity Protection PIN (IP PIN) from the IRS. An IP PIN is a unique six-digit number issued by the IRS to safeguard taxpayers against tax-related identity theft. Similar to the PIN on your ATM card, this number is used to authenticate your identity and helps prevent criminals from filing fraudulent tax returns using your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
The process to request an IP PIN is as follows:
- Visit https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin and click Get an IP PIN.
- Log in with your ID.ME account or create a new one (identity verification is required).
- After you have obtained an IP PIN, keep in mind you must provide the PIN to your trusted tax professional if they are to file a return on your behalf.
- A new IP PIN will be issued by the IRS annually. It is important to safeguard this number and share it with your tax professional each year.
Monitor your accounts. Early signs of tax fraud or identity theft often appear as unusual activity on your financial statements. It is vital to regularly review your credit card and bank statements for inconsistencies, including unfamiliar transactions, accounts, and addresses.
In addition, it is important to periodically review who has access to your financial accounts at Bessemer and elsewhere. This will ensure your financial institutions have a current list of people you have authorized to participate in your financial affairs. This is particularly important if you’ve given power of attorney to someone.
Optimize usernames and passwords: Using strong usernames and passwords is your first line of defense against cybercriminals attempting to access your tax accounts, financial details, and sensitive personal information. Many tax scams rely on stolen or weak credentials to infiltrate online tax preparation platforms, government portals, or email accounts where tax-related information may be stored. To protect yourself, use unique, strong passwords for all tax-related accounts. To further enhance security, consider using a password manager — such as Dashlane and 1Password, among others — to generate and securely store complex passwords.
Additionally, enable multifactor authentication (MFA) wherever possible, particularly on IRS accounts, tax preparation services, and financial websites. MFA adds an extra layer of protection by requiring a second verification step, such as a one-time code sent to your phone or via an app.
The Best Protection: Staying Informed and Proactive
While cybercriminals exploit tax season to target individuals and families, you can significantly reduce your risk by staying informed and taking precautions — securing an IP PIN from the IRS, monitoring your financial accounts, and strengthening your online security. In addition, remain skeptical of unsolicited communications and verify the legitimacy of tax-related requests to avoid falling victim to scams.
By adopting these habits, you can better protect your personal and financial information — not just during tax season, but year-round.
If you have questions about tax security or need assistance with implementing these measures, please consult with your tax professionals or your Bessemer client advisor.
This material is for your general information. It does not take into account the particular investment objectives, financial situation, or needs of individual clients. This material is based upon information obtained from various sources that Bessemer Trust believes to be reliable, but Bessemer makes no representation or warranty with respect to the accuracy or completeness of such information. Views expressed herein are current only as of the date indicated, and are subject to change without notice. Forecasts may not be realized due to a variety of factors, including changes in economic growth, corporate profitability, geopolitical conditions, and inflation. Bessemer Trust or its clients may have investments in the securities discussed herein, and this material does not constitute an investment recommendation by Bessemer Trust or a offering of such securities, and our view of these holdings may change at any time based on stock price movements, new research conclusions, or changes in risk preference.
