Tax Season Scams

‘Tis the season! Unfortunately, we aren’t talking about the holiday season. We’re talking about tax season! While most of us dread the files, forms, and checkboxes associated with this time of year, there are those with malicious intent who look forward to the many opportunities it presents.

From February through April, there is a drastic increase in the amount of personal identifiable information available online as people work to get their taxes to the finish line. This information often includes social security numbers, addresses, bank details, and employer information, all of which could lead to devastating repercussions if it ends up in the wrong hands.

According to FlashPoint, the IRS identified more than $2.3 billion in tax fraud schemes in 2020. In 2021, they estimated there were approximately 69 million exposed records, including tax information, documents, after 113 security breaches took place. Below, we’ll highlight the most common schemes used during tax season as well as ways you can avoid becoming a victim.


The Schemes
Phishing Emails - One of the most common tactics used by tax scammers are phishing emails designed to impersonate the IRS. Attackers will use various methods to capture personal information including password-stealing malware, malicious zip files designed to get the recipient to enable macros, requests for documents to be filled out and returned, and more. In each of these cases, the scammers use social engineering to instill a sense of urgency, gain trust, or scare their targets through the wording used, attachments included, and design of the email. 

Identity Theft - A critical piece to some of the most successful tax schemes is identity theft. Prior to carrying out an attack, cyber criminals will spend time collecting a multitude of personal identifiable information on their targets. This information is typically gathered through phishing campaigns, remote desktop protocol access, data breaches, and tax documents found on the dark web. With these details in hand, scammers are able to impersonate an individual, or individuals, for monetary gain.

Tax Return Fraud - The personal information gathered through phishing campaigns and identity theft techniques is typically used to file a tax return under someone else’s identity. In many instances of tax return fraud, the threat actor will attempt to file electronically at the beginning of the tax season to claim their target’s return before they are able to file it themselves. More sophisticated and experienced cyber criminals will also use the illegally gathered personal information to file hundreds of returns at once, and in some instances, use programs allowing them to file 1,000 returns in an hour.

Refund Recalculation - When filing tax returns, we all hope to receive as much money back as possible, and this hope is one attackers tap into with refund recalculation scams. Victims are most often contacted via text, phone, or email, and told their refund amount has been recalculated and they are owed more money than indicated in their initial return. With the prospect of more money at the top of their minds, many targets will click false links, provide private information, and unknowingly fall victim to a scheme designed to take funds out of their wallets instead of adding to it.


The Defense
Protect Personal Data - Your personal information is like a golden ticket to cyber criminals during and after tax season. From identity theft and tax refund fraud to stealing money and hacking your accounts, the possibilities are endless when your personal information is available to them. This is why it is critical to take the precautions needed to protect it, including never sharing usernames and passwords, limiting the personal information posted on social media, shredding documents, avoiding free WiFi, and updating your privacy settings.

Create Strong Passwords - Using strong, unique passwords is one of the easiest ways to keep cyber criminals out. Ideally, your password should be 12-15 characters long and contain numbers and special characters. It’s also important to never have a device save your passwords and to update them routinely. While it may be tedious, creating different passwords for different accounts and websites will add an additional layer of security to keep the bad actors out and your private information in.

Delete Emails / Texts - The IRS will never contact you via text, email, or phone to request personal or financial information. Almost all communication from them will come via physical mail and are typically sent to notify you about your return, to request more information, or to provide additional details about your account. Because of this, and as a best practice, you should never open an email or text message that appears to have come from the IRS. You should also never provide information over the phone to someone who claims to be from the IRS. If it looks or sounds suspicious, it probably is.

Secure Your Devices - Creating strong passwords is a great first step towards securing your information and devices, but your security measures shouldn’t stop there. Another important step to take includes routinely updating your operating system as well as investing in anti-virus software and firewall protection. These updates help patch security flaws and vulnerabilities, eliminate bugs in your software, add additional lines of defense, and more. So the next time you get that pesky “Restart Now” message, don’t close out of the window because it could be the difference between protecting the information you can’t afford to lose and leaving it exposed to the criminals hoping to capitalize on your mistakes.

Although tax season is a prime time for cyber criminal activity, you should always be cognizant of your online practices and device security. To learn more about how you can protect your most valuable information, you can visit our How Can You Be Cyber Smart blog.

If you’d like to take a deeper dive into the world of information security, be sure to check out our free Starter Pass, which gives you access to hundreds of hours of Cyber Security, Cloud, Networking, and Data Science material!


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