Refund Fraud and Identity Theft: How Scammers Exploit IRS Impersonation

Refund fraud and identity theft are escalating as criminals use increasingly sophisticated scams to target unsuspecting taxpayers. Fraudsters now use social media and phishing emails to impersonate IRS officials and deceive taxpayers with false refund promises. They specifically target small business owners, individuals with tax debt, and filers being misled about bogus credits — including a non-existent "Self-Employment Tax Credit" that the IRS has identified as a Dirty Dozen scam. The IRS urges taxpayers to verify refund messages, avoid dishonest tax preparers, and report fraud immediately through authorized government platforms.

What Is an IRS Refund Scam?

An IRS refund scam occurs when criminals impersonate the Internal Revenue Service to deceive taxpayers with fake refund offers or tax debt solutions. Scammers send phishing emails, text messages, or social media posts requesting personal or financial information under the pretense of processing a tax return. The Internal Revenue Service warns taxpayers that it does not initiate contact through unsolicited emails, calls, or messages demanding immediate payment or refunds.

These tax scams allow criminals to request personal data and file fraudulent tax returns. They often pose as tax professionals or dishonest tax preparers, targeting a range of taxpayers with false credit claims. Two separate scams the IRS has specifically flagged are:

• Bogus "Self-Employment Tax Credit" claims — There is no such credit. The IRS has identified promotions of a "Self-Employment Tax Credit" as a Dirty Dozen scam. The real, narrower credit being misrepresented is the Credits for Sick Leave and Family Leave, which applies only to eligible self-employed individuals under specific pandemic-era provisions and is not a broadly available benefit.
• False Fuel Tax Credit claims — The Fuel Tax Credit is a real credit, but it applies only to off-highway business and farming use and is not available to most taxpayers. Scammers falsely promote it as a widely accessible refund opportunity.

To report fraud, taxpayers should use the IRS website or contact the Treasury Inspector General.

How to Recognize Fake IRS Messages

The Internal Revenue Service warns taxpayers to remain vigilant as tax scams proliferate through various online and offline channels.

Criminals attempt to steal personal and financial information by using phishing emails, text messages, and social media posts that impersonate the IRS.

• Scammers posing as dishonest tax preparers or tax professionals may falsely claim that you owe taxes or have an outstanding tax debt, demanding immediate payment via a wire transfer or prepaid debit card.
• The IRS generally does not initiate contact through social media channels or emails claiming false tax refunds or credits.
• Be especially wary of anyone promoting a "Self-Employment Tax Credit" — this credit does not exist and is an active IRS-identified scam. If you are eligible for pandemic-related relief, the correct program is the Credits for Sick Leave and Family Leave. 
• Always verify any suspicious communication on the official IRS website before providing sensitive information or responding to potential scams.
• If you suspect fraud or encounter a fraudulent tax return, contact the Treasury Inspector General for Tax Administration or your local police department immediately.

How the Real IRS Contacts You

The Internal Revenue Service reminds taxpayers that it will never initiate contact through text messages, social media channels, or phishing emails. Legitimate IRS communication begins with a mailed notice — not an unsolicited email or call claiming you are owed a refund or tax credit.

Scammers posing as fake IRS representatives demand immediate payment through prepaid debit cards, wire transfers, or other unofficial methods. They exploit social media posts and fake tax preparer ads to collect sensitive information from self-employed individuals and families. The IRS warns taxpayers to verify every notice through the official IRS website, report fraud promptly, and consult trusted tax professionals.

What to Do If You've Already Been Scammed and How to Report Fraud

Victims of fake IRS refund messages or dishonest tax preparers must take action promptly to protect their personal and financial information.

• Report abusive tax schemes or preparers using Form 14242 – Report Suspected Abusive Tax Promotions or Preparers, which can be mailed or faxed to the IRS Lead Development Center. Taxpayers and tax practitioners may also submit information to the IRS Whistleblower Office. 
• Change all passwords on any accounts accessed through phishing emails or other suspicious emails.
• Contact your bank immediately if scammers have used a wire transfer, prepaid debit card, or demanded immediate payment.
• Notify the Internal Revenue Service if you received a fake email falsely claiming a tax credit or refund — particularly any message promoting a so-called "Self-Employment Tax Credit," which is a bogus, non-existent credit.

Long-Term Security and Prevention Tips

The Internal Revenue Service warns taxpayers to remain cautious as tax scams continue to evolve through phishing emails, text messages, and social media posts. Criminals posing as the IRS send messages claiming you owe taxes or must make an immediate payment by wire transfer or prepaid debit card. The IRS does not accept unofficial payment methods for any tax-related obligation.

To avoid falling victim:

• Always confirm messages on the official IRS website before sharing any personal or financial information with anyone.
• Do not trust unsolicited claims about credits you did not apply for — especially any mention of a "Self-Employment Tax Credit," which the IRS has explicitly identified as a non-existent, scam-promoted credit. The real program, the Credits for Sick Leave and Family Leave, is narrow in scope and was tied to specific pandemic-era eligibility requirements. 
• Avoid dishonest tax preparers by carefully checking the credentials of any tax professional before filing your tax return or claiming a tax credit.
• Be cautious of anyone promoting the Fuel Tax Credit as a broadly available refund — it applies only to off-highway business and farming use, and is not available to most taxpayers. 

The IRS generally contacts taxpayers by mail to discuss tax debt, fraudulent tax returns, or unpaid tax years — not through social media channels or unsolicited messages promoting fake refund offers.

Sources

Taxpayers can access reliable resources from the Internal Revenue Service, Treasury Inspector General for Tax Administration, and Federal Trade Commission to verify alerts, learn prevention strategies, and report fraud effectively. The Internal Revenue Service frequently updates its Tax Scams and Consumer Alerts page to expose emerging tax-related schemes. Meanwhile, the Treasury Inspector General for Tax Administration and the Federal Trade Commission provide official resources and tools for fraud prevention and reporting to safeguard taxpayers.

• Internal Revenue Service (IRS): Tax Scams/Consumer Alerts
  
• Treasury Inspector General for Tax Administration (TIGTA): Fraud Warnings
  

By William Mc Lee, Editor-in-Chief & Tax Expert—Get Tax Relief Now