Top Tax Scams Every Business Owner Needs To Watch Out For In 2025
Tax season is around the corner, which means so are tax scams. Every year, individuals and business owners fall victim to tax scams without fail. They lose substantial amounts of money and sensitive personal data. According to the Better Business Bureau, taxpayers lost $5.7 billion due to tax scams and fraud in 2022 alone. In today’s article, you’ll discover the top scams. You need to be on the lookout for these scams. This awareness will reduce your chances of becoming these scammers’ next victim.
The IRS has specific methods of contacting you
Know how the IRS will contact you. This is one way to lessen your chances of falling for Internal Revenue Service scams. Per the IRS website, the IRS will not initiate communication with taxpayers through e-mail. They also won’t use text messages or social media platforms to solicit personal or financial information. The IRS’s main method of communication is physical mail. If they’re unable to reach you via mail, they may initiate a phone call. If this is the case, they will try not to solicit any personal or financial information over the phone. They will never threaten you or demand payment. If you’re second-guessing anything you receive, you can check out this article. It can help you figure out if it’s really the IRS contacting you.
Here are the top scams to keep an eye on this tax season
The Refund Scam
The Internal Revenue Service has issued a warning to taxpayers. The warning is about a scam. This scam is designed to deceive individuals into believing they are entitled to a refund. This is often the most common scam that we see happen every year.
In this scheme, recipients receive a formal notification, usually a letter, stating that they have an “unclaimed refund” available. There are variations of this. One scam uses a cardboard envelope from what looks like a certified delivery service. It also bears the IRS logo.
The deceptive letter provides contact information. Similar to many scams, it includes a phone number that is in no way affiliated with the IRS. What sets this scheme apart is its request for various sensitive personal details from taxpayers. This includes detailed images of driver’s licenses. Identity thieves seeking to get ahold of tax refunds and other confidential financial data can exploit such information. Stay vigilant and be cautious of such misleading communications. If something seems off, it probably is.
Identity Theft
Cybercriminals can get access to your personal information. They can file a fake tax return on your behalf. They might collect a refund payment. The IRS recently shared that more than 1 million tax returns were flagged last year for possible identity theft.
One tool to prevent tax ID theft is to apply for an Identity Protection PIN from the IRS. Make sure to do this before you file your return. It’s also good to file early before criminals have a chance. If you receive a notice about an alleged “duplicate tax return,” contact the IRS directly as soon as possible. If you receive a notice saying that additional taxes are owed, contact them immediately.
The ERC Scam
The Employee Retention Credit (ERC) is sometimes called the Employee Retention Tax Credit or ERTC. It is a refundable tax credit against certain employment taxes. The IRS and tax professionals continue to see aggressive broadcast advertising, direct mail solicitations and online promotions involving the ERC. While the credit is real, aggressive promoters are misrepresenting and exaggerating who can qualify for the credit.
This situation prompted the IRS to issue many warnings. These warnings are about ERC schemes from third-party promoters. They often charge large up-front fees or a fee based on the refund amount. These promoters may fail to inform taxpayers. Taxpayers must reduce wage deductions claimed on the business’s federal income tax return by the amount of the credit.
Businesses, tax-exempt organizations, and others considering applying for the ERC need to carefully review the official requirements. They should do this before they claim the credit.
The “Impact Payment” Scam
Be aware of a new online scam circulating. As you prepare to collect the required documents for filing your 2023 return, keep this in mind. This scheme involves an e-mail displaying the IRS logo. It addresses the “third round of economic impact payments.” The e-mail deems it an “important matter concerning your recent tax return filing.”
The e-mail asserts that certain inconsistencies or missing information have been identified. It assures recipients that a refund of $976 awaits them. This happens upon submission of the required document. There’s a button labeled “complete my information.” IRS Media Relations Specialist Robert Marvin urges you not to click it.
The “Additional Information Needed” Scam
If you receive an e-mail from the IRS requesting that you submit a tax form, proceed with caution. Taxpayers may be required to complete legitimate forms. Examples include the W-9 for freelancers and W-4 forms for employees. These are typically directed to companies. They do not go directly to the taxpayer from the IRS.
To avoid potential scams, ignore such messages. Report the fraud to the IRS promptly. It’s important to note that the IRS does not initiate contact via e-mail. Any solicitation for forms through this method is indicative of fraudulent activity.
Another Tax Agency Scam
Scammers may adopt the appearance of legitimate or fictitious tax agencies when making phone calls. Instances include impersonating entities like the Taxpayer Advocate Service or the nonexistent Bureau of Tax Enforcement.
While the Taxpayer Advocate Service is a legitimate entity, it does not initiate unsolicited calls to taxpayers. On the other hand, the Bureau of Tax Enforcement is not a genuine organization.
Exercise caution and skepticism toward unsolicited calls alleging to be from government agencies. Obtain a reference number if possible, terminate the call and initiate a return call using an officially verified phone number. This practice helps protect against potential scams.
Be Smart And Protect Yourself
The tax season often sees a surge in scams. With some vigilance, identifying an IRS imposter becomes possible. You can protect your finances and sensitive data.
To enhance protection and mitigate the risk of identity theft, it is recommended to file your taxes early. Early filing reduces the window for scammers to impersonate you. When hiring a tax preparer, conduct thorough vetting. Be wary of those promising substantial refunds without prior access to your information. For an added layer of security and peace of mind, explore a fraud protection service.
Cybercriminals never take a break. Tax scams are only one way they’re trying to steal your information and money. It’s important to have a full cyber security system in place. This ensures your organization is protected at every possible entry point. We recommend getting a FREE third-party security assessment. Our team of experts will examine your entire network for vulnerabilities. They will help you map out a plan to fix them. In all the years we’ve been doing this, we’ve always found something.
To schedule your no-obligation assessment for your peace of mind, click here.
