According to the Internal Revenue Service (IRS), the United States’ tax season will begin on Monday, January 24, 2022, when the tax agency will begin accepting and processing 2021 tax year returns. Unfortunately, tax season also means tax scams. Better Business Bureau issues a warning about con artists who uses individuals’ personal information to file phony tax returns and steal refunds.

How the Scam Works

Scammers steal tax information in several ways, such as a phishing scam, a corrupt tax preparation service, or the information was exposed in a hack or data breach. Sometimes tax scammers file in the name of a deceased person or steal children’s identities to claim them as dependents. 

Online filers that go through the IRS website usually expect a refund. Instead, a written IRS notice arrives in the mail, stating that more than one tax return was filed using your Social Security number.

What happened? Scammers got hold of personal information, typically the account holder’s Social Security number, address, and birth date. They filed your return early and received your refund before you even got around to filing.

Tax identity theft is a particularly sneaky con because victims typically don’t realize they’ve been targeted until they actually file their taxes.

How to Avoid Tax Identity Theft Scams:

  • The best way to avoid tax identity theft is to file your taxes as early as possible. File before a scammer has the chance to use your information to file a fake return.
  • In the U.S., jot down your Identity Protection PIN (IP PIN) from the IRS before you file your return. This is a six-digit number, which, in addition to your Social Security number, confirms your identity. It is important to note that you cannot opt-out once you get an IP PIN. So once you apply, you must provide the IP Pin each year when you file your federal tax returns. The IRS will provide your IP PIN online and then send you a new IP PIN each December by postal mail. Visit the IRS for more information about the program. Read BBB’s tips about the IRS PIN
  • The IRS does not initiate contact with tax payers by email, text message or social media to request personal or financial information. This includes requests for PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.
  • Only deal with trustworthy tax preparation services. For many people, major life changes, business ownership, or simply a lack of knowledge about the ever-changing tax laws make finding a trustworthy tax preparer a good idea. That said, not all tax preparers have the same level of experience and training. See our tips for finding the right tax preparer for you
  • Check out websites carefully and make sure you are accessing the real IRS or CRA website when filing your taxes electronically or inquiring for additional information.
  • If you get tax information delivered electronically from your employer or other entity, treat that information carefully. Download it onto a password-protected computer.

More information is available about tax scams and how to avoid them:  BBB Tip on Tax Scams. If you are the victim of tax identity theft in the U.S., contact the IRS at 1-800-908-4490 and consider filing a complaint with the Federal Trade Commission (FTC) at ftc.gov/complaint or by calling 1-877-FTC-HELP. The FTC also offers a personalized identity theft recovery plan at identitytheft.gov

If you’ve been targeted by this or another scam, help others avoid the same problem by reporting your experience to BBB.org/ScamTracker.