Some tips to fight fraudulent tax-return scammers

Having someone file taxes on your behalf isn’t as relaxing as it sounds.

Tax-return fraud remains a high-impact risk, according to the IRS and industry pros who spoke with IT Brew.

“That is arguably one of the number-one issues impacting the largest number of taxpayers,” Eric Bronnenkant, head of tax at investment app Betterment, told IT Brew.

In 2023, IRS Criminal Investigation (CI) led 1,409 tax crime investigations and discovered $5.5 billion in tax fraud, according to a January 29 post from the agency.

“Tax crimes surge during filing season because criminals steal unknowing taxpayers’ information, hack into the servers of CPA firms and tax preparation services and victimize unsuspecting taxpayers with the false promise of huge tax refunds,” CI Chief Jim Lee said in the release.

For victims, recovery from identity fraud can take months, or even years.

“As opposed to some cybercrimes where the ramifications feel a little bit intangible and kind of remote, this is something that is more immediate to people and can have a real-life effect,” Lisa Plaggemier, executive director at the National Cybersecurity Alliance, told us. Plaggemier also advises others to file early—effectively getting the return work done before a scammer can.

Bronnenkant uses an optional, IRS-issued 6-digit code as one way to defend against fraudsters.

The Identity Protection (IP) PIN, known only to the filer and the agency, acts as an authenticator. Though the code–which you can obtain from the IRS–is not a security guarantee (it can get lost or compromised, like any other credential), the digits make a tax scammer’s life harder.

“Rather than trying to find more information, they will just likely move on to somebody else who’s an easier target,” Bronnenkant said.

To combat impersonation attempts, the IRS recommended avoiding return preparers who claim larger-than-average refunds; not clicking on unsolicited emails related to returns; and ensuring the refund goes to the tax filer’s account, not the tax preparer’s.

While the IRS, when we contacted the agency, didn’t reply specifically about the value of the IP PIN, spokesperson Richard Sanford said in an email: “Taxpayers should be sure they get a tax preparer’s signature on their tax return (if prepared for them) by a preparer with a PTIN (Preparer Tax ID Number). Always go over your tax return with your tax preparer before you sign it and ask questions about anything you don’t understand.”

Identity verification seems more important than ever as “new client” scams, and even deepfakes, enter the chat.

“I wouldn’t be surprised if we hear a report this tax season, somebody who thinks they’re talking to their accountant on a Zoom call, to their CPA or something, only to find out it was a cybercriminal, and it was an AI-generated voice and face,” Plaggemier said.