How to Avoid — and Outsmart! — Scammers This Tax Season

Estimated Reading Time: 6 Minutes

Although 2024 is now officially behind us, the final step to closing out the year is to start preparing and filing 2024 personal income taxes. As the 2025 tax season kicks off, it's essential to help your customers stay sharp and savvy against tax scams and identity theft. That begins with encouraging them to file taxes early. While most tax payments are still due by April 15, 2025, there are a few states that have an extended deadline (May 1, 2025), as the IRS issued disaster tax relief for all individuals and businesses affected by Hurricane Helene. These states include Alabama, Georgia, North Carolina, South Carolina, and parts of Florida, Tennessee, and Virginia.

Regardless of when your customers’ tax payments are due, the best way to prevent a fraudster from stealing their tax return is to file early. The IRS processes returns on a first-come, first-served basis, so the earlier they file, the better.

Keep reading to learn the scams to expect in 2025, how scammers commit tax fraud and identity fraud, and proactive tips to share with your customers to help them safeguard their personal and financial data.

Key Takeaways

The 2025 tax deadline is April 15 for most states, with a few adjusted deadlines for special circumstances.
Tax scams are evolving, with threats ranging from AI-powered impersonation to unemployment fraud.
Phishing emails, fake IRS phone calls and text messages, and Social Security suspension threats are common fraud tactics.
Share these proactive tips with your customers:
- File taxes early to thwart fraudsters.
- Ignore spoofing attempts and unsolicited IRS communications via phone calls, text messages, or email.
- Use secure connections and monitor financial accounts.

What Scams Can We Expect in 2025?

Tax-related identity theft has been a perennial headache, but the tools scammers use are becoming more sophisticated. For instance, in 2022, the IRS reportedly stopped over 89,000 fraudulent tax returns, highlighting the scale and complexity of modern tax fraud schemes. Every year, the IRS compiles a list called the “Dirty Dozen,” which lists a variety of common scams taxpayers may encounter during filing season.

Here are a few of the “Dirty Dozen” tax scam efforts identified by the IRS that thieves use to steal personal information:

Phishing Attacks: Fraudsters continue to use fake IRS emails, social media outlets, and text messages (also called “smishing”) to trick taxpayers into sharing sensitive information. These “phishing” messages often look official and may include links to counterfeit IRS websites.
Impersonation Scams leveraging AI: Another common phishing scam involves using advanced AI. In this case, scammers gather information on unsuspecting individuals – like their pictures, addresses, employment status, and other personal data – to create fake legal documents like driver’s licenses. The license will feature the thief’s face but with the victim’s information. AI allows cybercriminals to generate these seemingly real documents quickly to impersonate taxpayers and steal their tax refunds.
Social Security Number (SSN) Threats: This classic scam involves calling individuals and demanding payment or personal information — like their Social Security number — “or else.” The scammer then refuses to answer any questions or allow the individual to appeal the amount of taxes they claim is owed – which is a clear red flag, as the IRS will never demand payment or avoid answering pertinent payment questions.
Unemployment Benefits Fraud: Fraudsters file fake unemployment claims using stolen personal data, leaving taxpayers to untangle the mess with the IRS. Unfortunately, many victims of this crime don’t know they’ve been victimized until they try to file a legitimate claim for unemployment benefits, receive an IRS 1099-G form showing the benefits fraudulently collected from unemployment insurance, or some other notification. If this does happen, it is important to report unemployment identity fraud to the state where it occurred.

Stats to Know

The Federal Trade Commission received nearly 6,000 reports of fraudulent tax preparers in 2023. In the same year, the FTC collected over 89,000 employment or tax-related reports.
In 2023, the IRS confirmed over 87,000 identity theft tax returns, preventing $1.2 billion in fraudulent tax refunds.*
According to the 2023 Identity Theft Tax Refund Fraud Information Sharing and Analysis Center (ISAC) annual report, the number of data compromises reported in the U.S. in the first half of 2023 was higher than the total compromises reported every year between 2005 and 2020, except for 2017.

How Scammers Commit Tax Fraud

Understanding how tax scams work is the first step to helping your customers mitigate their risk of falling for them. By knowing the tactics fraudsters use, your customers can better safeguard their personal and financial information during tax season. Here’s a short list of fraudsters’ favorite tactics:

Data Breaches and Dark Web Sales: Stolen personal information is often sold online, providing scammers with the SSNs and financial details needed to file fake tax returns.
Direct Deposit Diversion: Once fraudsters file a fake return, they ensure tax refunds are deposited into accounts they control.
Phony IRS Correspondence: Using forged documents, scammers request additional personal or financial details from taxpayers to further commit identity theft and fraud.
Fake Tax Preparers: Posing as legitimate tax professionals, scammers steal sensitive information during the tax preparation process.

Tips for Safeguarding Personal and Financial Information

Share these actionable tips with your customers to help them avoid tax scams:

File Early: Encourage customers to file their state and federal tax returns as soon as possible to reduce the window of opportunity for fraudsters to act. Employers must provide their employees with a federal Wage and Tax Statement (W-2) by January 31 to avoid being fined by the IRS. So, advise your customers to file once they’ve received all their tax documents.
Be Suspicious of Unsolicited Communications: The IRS will never initiate contact via email, text, or social media. Genuine correspondence comes through the mail.
Verify Tax Preparers: Recommend only working with accredited, trustworthy tax professionals. A quick search through the IRS Directory of Preparers can help.
Use Secure Internet Connections: Filing taxes over public Wi-Fi is a big no-no. Stick to secure private networks for any financial transactions. Consider using a VPN to encrypt online data so cybercriminals can’t spy on or steal sensitive information.
Activate Two-Factor Authentication: For any accounts holding sensitive data, two-factor authentication adds a valuable layer of security.
Monitor Financial Accounts: Keeping an eye on bank accounts and credit reports helps identify fraudulent activity early.
Stay Current with IRS Security Measures: Encourage taxpayers to add an extra layer of protection between their federal tax returns and identity thieves by getting an Identity Protection Personal Identification Number (IP PIN). An IP PIN is a six-digit number that “prevents someone else from filing a tax return using your Social Security number or individual taxpayer identification number (ITIN),” and is only known to the individual and the IRS.

Sharing these insights can help you strengthen customer relationships while promoting a safer, smarter tax season for everyone. Let’s make 2025 the year we outsmart the scammers!

Interested in learning how you can provide your customers an invaluable identity and cyber protection service, complete with award-winning fraud resolution, identity and credit monitoring, alerts, scam analysis tools, and educational resources? Contact us today to explore how your business can kick the year off right by protecting your customers’ identities year-round.

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* For the 2023 Filing Season, IRS management indicated that the IRS uses 260 filters to identify potential identity theft tax returns and prevent the issuance of fraudulent refunds. In comparison, the IRS used 168 filters for the 2022 Filing Season. These filters incorporate criteria based on characteristics of confirmed identity theft tax returns, including amounts claimed for income and withholding, filing requirements, prisoner status, taxpayer age, and filing history. Tax returns identified by these filters are held during processing until the IRS can verify the taxpayer’s identity. If the individual’s identity cannot be confirmed, the IRS removes the tax return from processing to prevent the issuance of a fraudulent refund.