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Worst Tax Scams of 2016

By Matthew Frankel, CFP® – Nov 6, 2016 at 12:51PM

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Think tax scams ended after tax season? Think again.

Image source: Getty Images.

With the recent passing of the extended tax deadline, it may seem you don't need to worry about tax scams, for the rest of 2016 at least. Noting could be further from the truth. Now is when scammers really come out of the woodwork to try to collect bogus tax debt or "verify your personal information" in an effort to steal your money and/or your identity. Here's what the biggest tax scams of 2016 look like, and some easy tips that can help you avoid becoming a victim.

Telephone scams

IRS telephone scams are a big problem. The exact scam varies, but essentially, a caller pretends to be an IRS employee to convince victims that they owe taxes that must be paid immediately.

A common version of this scam, which specifically targets recent immigrants, involves calling and claiming that tax is due and must be paid right away, using either a prepaid debit card or via wire transfer. According to the IRS, these callers can be quite convincing, may know a lot about their victims, and use official-sounding titles and IRS badge numbers. Some scammers even have "IRS" or some variation show up on victim's caller ID to further legitimize the call.

Another variation of the phone scam isn't after an immediate payment, but rather is intended to steal victims' identities. In this scam, the caller tells the victim he or she has an unclaimed refund and will attempt to get the victim's personal information, such as Social Security numbers, employment information, and other identifying information.

The best defense to these scams is knowing exactly what the IRS will never do.

Specifically, the IRS will never:

  • Call to demand an immediate payment with a specific payment method.
  • Threaten to have you arrested for non-payment.
  • Deny you a chance to appeal the amount you owe.
  • Ask for your credit or debit card number over the phone.
  • Call you out of the blue to try to pay a refund due to you.

If a caller does any of these things, it's a scam. Hang up, and report the scammer to the IRS.

Phishing scams

A particularly alarming trend in 2016 is a surge in phishing and malware scams. This year's tax season alone has produced a 400% increase in these types of incidents.

These scams are conducted through emails and, more recently, through text messages. Basically, these scams attempt to trick victims into thinking they're actual IRS communications, or communications from tax-preparation companies. They will often direct people to official-looking websites. Just to be clear, the official IRS website is If a website's address doesn't begin with that exact address, it is not a legitimate IRS page.

These fraudulent communications often ask victims to confirm their personal information, such as Social Security numbers, which are often used to file false tax returns in victims' names. Other phishing scams contain links to sites carrying malware that can allow thieves to get sensitive information directly from your computer.

These scams are 100% avoidable just by knowing one simple fact: The IRS doesn't initiate contact with taxpayers through email, text messages, or social media. Any "IRS" communication originating from one of these sources is a scam. Period. Don't click on any links, and immediately forward the email in question to [email protected].

Specific scams to watch out for

According to the latest consumer alerts issued by the IRS, some specific tax scams that have been seen frequently in recent months.

  • A phishing scam of an email containing a fake tax bill related to the Affordable Care Act.
  • A back-to-school phone scam demanding payment of the "federal student tax," which doesn't exist.
  • Robo-call scams instructing victims to call back to immediately settle a tax bill.
  • A phishing scam specifically targeting Washington, D.C., Maryland, and Virginia attempting to get victims to "verify" personal information.
  • Scammers calling to "verify a few details" of your tax return.

The bottom line

Tax scammers prey on people who don't understand how he IRS operates. Therefore, by educating yourself on what the IRS will and will not do, you'll put yourself in the best position to avoid becoming a victim.

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