Tax fraud: How to protect yourself

Tax season is here, and unfortunately that means it’s also a peak time for the legions of scammers and tax cheats who are increasingly adept at separating you from your refund.

The number of confirmed cases of tax fraud rose 31% from 2022 to 2023, according to the U.S. Treasury inspector general, and the Internal Revenue Service flagged nearly 1.1 million tax refunds last March as possibly the work of identity thieves. Meantime, New York tax authorities initiated 131 fraud investigations last year, up from 94 in 2022.

Fraudsters are especially active this time of year, authorities said, as Americans open their financial books and navigate what is, for many, a complicated and confusing filing process. To help you protect yourself, the IRS has rolled out a series of advisories to prepare you for schemes that might be headed your way.

Here are some of the highlights:

Ways to protect yourself from tax fraud

• Ask the IRS for an identity protection PIN (IP PIN).  This is a six-digit number that tax authorities use to verify your identity. It provides an extra layer of protection that could block someone from stealing your tax refund with hacked information – even if they have your Social Security number. To get one, you can go to the IRS website (irs.gov) and search for “IP PIN.” 
• Protect your personal information. Don’t click links on emails or text messages that are made to look like they come from state or federal tax authorities. Don’t respond to prerecorded calls from people saying they’re from the IRS and ignore any requests to pay tax debts with gift cards. Electronic messages could contain malware that could compromise your personal information. And scammers will pose as tax authorities in hopes of scaring people to send them money. Remember: The IRS does not initiate contact with individual taxpayers through email, text messages or social media. It also doesn’t leave prerecorded, urgent or threatening messages. And it will never ask you to pay for your tax debts with prepaid cards.
• If you’re using a tax preparer, do your homework. Authorities say they routinely deal with returns prepared by someone who was not qualified. Sometimes they’re scammers who want to keep a client’s refund for themselves. Make sure to ask them for their preparer tax identification number (PTIN). You can also verify credentials on the New York Department of Taxation and Finance website (tax.ny.gov); search for “verify your tax preparer". 
• Avoid preparers who make big promises. Firms that pitch themselves as being especially good at maximizing your refund may try to do so by signing you up for tax credits and deductions you shouldn’t receive.
• Make sure your refund is paid by direct deposit. Authorities noted that thieves rummage through mailboxes during tax season in search of refund checks.
• Never sign a blank tax form. An unscrupulous tax preparer could put whatever they want on a pre-signed tax form, and you wouldn’t know it. 

What to do if you think you’ve been scammed

If you think you’re a victim of tax fraud, here’s what you can do.

The IRS can be contacted at newyorkfieldoffice@ci.irs.gov or 917-416-9926, and you should also notify them by filling out form 3949-A, found on the IRS website. 

The New York Department of Taxation and Finance also says taxpayers who believe they’re victims of ID theft should file a form DTF-275, found on the department's website or by calling 518-457-5181. 

Ultimately, the government expects you to take responsibility for what’s on your forms, even if you used tax-prep software or a professional preparer. 

“You’re liable for everything on that return,” said Thomas Fattorusso, an investigator at the IRS criminal investigation division in New York. “Before you push that button [to send it to the IRS], go over it line by line to make sure you’re comfortable with all of it.”