How to Spot and Report IRS Refund Scams

IRS refund scams are a persistent threat from criminals using sophisticated methods to steal personal data and money. These schemes exploit the tax system’s complexity and the IRS’s authority to create a false sense of urgency. Understanding how these scams work is the first step for taxpayers to protect their financial well-being.

Common Tactics Used in Refund Scams

Scammers use several channels for contact. Phishing emails and smishing (text messages) are common and often contain links to counterfeit websites that mimic the official IRS.gov portal. These messages might claim you are due an unexpectedly large refund or that there is an issue with your tax return that requires immediate verification of personal details. The goal is to harvest sensitive data such as Social Security numbers (SSNs) and bank account information.

Vishing, or voice phishing, involves phone calls from individuals impersonating IRS agents. These impostors often use aggressive language, demanding immediate payment for a fabricated tax debt to avoid arrest. They may spoof their caller ID to appear as if the call is from the IRS, creating a high-pressure situation to make the target act without thinking.

Another narrative involves a supposed tax refund error. A scammer might send a fake check and then contact the recipient, claiming the IRS overpaid them. They then demand the “excess” amount be returned immediately. After the victim sends the funds, the original fraudulent check bounces, causing a direct financial loss.

Identifying Official IRS Communication

The most reliable way to spot a scam is to know how the IRS conducts business. The agency’s primary method of initial contact is through the U.S. Postal Service. The IRS does not use email, text messages, or social media to initiate contact about a personal tax issue. While the IRS may call to verify information, this is usually after you have already received a letter from them.

There are specific actions the IRS will never take. The agency will not call to demand immediate payment or require you to use a specific payment method like a gift card, wire transfer, or cryptocurrency. IRS employees will not threaten to bring in local police to have you arrested for not paying.

The IRS will also not demand tax payment without giving you the opportunity to question or appeal the amount owed. Any communication that pressures you for instant payment is not from the IRS. If you receive a notice or letter, you can verify its legitimacy by visiting the official IRS website or calling the agency directly using a publicly listed number.

Steps to Take if Targeted by a Scam

If you recognize a scam attempt but have not provided any personal information or money, disengage and report the incident. Do not reply to the suspicious email or text, and do not click on any links or open attachments. These could install malware on your device or lead to a fraudulent website.

How you report the scam depends on the method of contact. For email, forward the entire message as an attachment to [email protected]. If you receive a fraudulent phone call, hang up and report it by emailing the caller ID information to [email protected] with the subject “IRS phone scam,” and also report it to the Treasury Inspector General for Tax Administration (TIGTA). For text messages, take a screenshot and email it as an attachment to [email protected].

Actions for Victims of Refund Scams

If you have already provided personal information or sent money, you must act quickly. The first step is to report the identity theft to the Federal Trade Commission (FTC) by visiting IdentityTheft.gov. This site provides a personalized recovery plan and an identity theft report.

Contact your bank, credit card company, or other financial institutions to report the fraud and ask about stopping or reversing unauthorized charges. Placing a fraud alert or a credit freeze with the three major credit bureaus—Equifax, Experian, and TransUnion—is another important step. A fraud alert warns creditors to take extra steps to verify your identity, while a credit freeze restricts access to your credit report.

You must also inform the IRS that your identity has been compromised by filing Form 14039, the Identity Theft Affidavit. This form alerts the IRS to the fraudulent activity associated with your tax account and helps the agency protect you from future tax-related identity theft. Completing this form formally documents the incident with the tax authority.