How to spot a fake IRS letter and what to do about it

The rise of tech-savvy scammers targeting taxpayers with deceitful Internal Revenue Service (IRS) letters adds a layer of complexity to keeping your sensitive data out of the wrong hands.

These criminals employ many tactics, from counterfeit tax refunds and tax returns to other misleading communication with taxpayers, such as “IRS email” scams. 

They’ve become so skillful that the IRS issued a consumer alert at a tax security summit at the end of the most recent fiscal year, warning taxpayers about some of these scams.

But how can you tell the difference between a real IRS letter vs a fake IRS letter? Keep reading to learn how to distinguish dangerous IRS communication scams from the real deal and what to do if you suspect your financial security may be compromised.

Common reasons for receiving IRS letters

The IRS may initiate contact with taxpayers for several reasons. One of the most common is to notify you about a potential discrepancy in your tax returns.

For example, the IRS might contact you if the income or deductions reported on your tax forms don’t match the information they have on file from your employer or financial institutions.

Another reason you might receive a letter from the IRS could be due to outstanding tax debt. If you owe taxes from previous years or have failed to make necessary payments, the IRS will contact you by mail to notify you about this and instruct you on what steps to take next.

You might also get a letter from the IRS if you’re due for a tax refund. Or the IRS needs to verify your identity or requires additional information to process your tax return.

Characteristics of legitimate IRS correspondence

Genuine IRS letters have distinct features that can help you tell they’re authentic. For example, the IRS always delivers letters through the United States Postal Service instead of a third-party shipping service, email, or other digital channels.

Authentic letters also include genuine IRS taxpayer assistance contact information to help you connect with IRS representatives if needed. You can verify these details through the official IRS website. Any website or email address should end in “.gov.”

In addition, legitimate IRS statements are all business. They tend to be highly objective-specific, providing information on matters like your tax return, tax deductions, or estimated taxes. 

Letters related to scams from IRS fraudsters often lack these details or fail to align with your actual tax record.

Red flags indicating a fake IRS letter

Counterfeit or deceptive communication claiming to be from the IRS is generally easy to spot. A scam letter usually asks for “tax payments” via wire transfers, prepaid debit cards, or third-party apps — which the IRS doesn’t use and would never request.

If the letter requests personal details such as your PIN for credit cards, bank routing details, or other sensitive information, it’s almost certainly a tax scam. Authentic IRS communications never request specific personal or financial information via mail. 

It’s also important to note that real IRS letters or IRS emails won’t threaten immediate legal action, especially not in an initial contact communication. That’s a common red flag.

Tactics of scammers using fake IRS letters

Unfortunately, scams involving fake IRS letters are surprisingly common and have taken advantage of people who didn’t know how to identify these letters as counterfeit. 

Let’s look at some common types of fraudulent IRS letter scams you should be aware of:

1. Refund scams

These scams generally involve a large refund or income credit, often resulting from a “computer error” or an unclaimed deduction. 

They’ll typically ask for personal details or a “processing fee” to claim the refund. Of course, there is no refund, and the thieves are only after your data or money. 

Sometimes, “ghost preparers” will send you a completed but unsigned IRS form and encourage you to submit it to claim this alleged large refund. These are also scams. You should never send such a form to the IRS.

2. Unresolved tax debt scams

You may receive a letter claiming that you owe a large sum in unpaid taxes, with the threat of possible legal action if you don’t make payment promptly. 

This demand can sometimes come with instructions to pay through unusual methods like a gift card or wire transfer. 

The actual IRS will always send multiple notifications through official channels like certified mail before considering legal action and would never request uncommon payment methods.

3. Phishing scams

These are among the most common IRS email scams and contain malicious links or attachments to hijack your personal or financial data, like social security numbers and credit card accounts. 

The IRS typically avoids sending links or attachments in their communication, but this is a favorite tactic of identity thieves.

4. Identity theft scams

These requests are a common form of IRS spam and can happen via mail and phone. 

Someone claiming to be with the IRS will call or send you an email, text message, or letter asking for sensitive details like your Social Security number, banking information, or date of birth. 

They usually do this under the pretense of verifying your identity to resolve a tax issue. Unexpected IRS calls are rare, and IRS communication via email wouldn’t require such specific information.

5. Employment retention credit scam

Watch out for an “employment retention credit” scam claiming you’re due a significant startup tax credit relating to the COVID-19 pandemic. 

You’ll typically receive a scam mailing saying you qualify for an “employment retention credit” (ERC) that you haven’t claimed. 

The ERC was a genuine tax relief program that qualifying employers could claim during the COVID-19 pandemic to cover Form W-2 wages and healthcare costs of employees who stayed with their business. 

However, the program has since expired, and the final deadline for people to claim the ERC was in September 2023. Any letter from “tax preparers” about unclaimed ERC funds is fraudulent.

Steps to confirm an IRS letter’s legitimacy

A letter from the IRS will have characteristics you can use to verify its authenticity. Here’s what you can do to ensure you didn’t get a fake IRS letter:

Check the letter for identifying features

Look for the official IRS logo and letterhead, including the correct address and phone number. Dates should be recent, accurate, and accurately formatted (month spelled out), and they should include official IRS security or file numbers you can refer to for more information. A fake letter may not have this information.

Analyze the content

Examine the content of the received letters. Check for the following things:

Reason for contact

The reasons for contacting you should be clear, whether it’s an audit, form inquiry, IRS online account update, or payment reminder. In contrast, IRS scam letters tend to be confusingly worded, vague, and with a suspicious lack of detail.

Note that an IRS employee typically won’t contact a taxpayer by email unless there’s an ongoing issue and they have already been in touch.

Tone of the letter

The letter’s formatting and language should be professional, with no typos, grammatical errors, or strange fonts.

It should address you by name and refer to details specific to your tax situation, such as your Social Security number and tax years. IRS scammers typically won’t have access to this kind of information.

Urgency

Official letters won’t threaten you with legal action or demand immediate payment. Instead, they typically offer reasonable payment options and ways to resolve issues.

Urgent wording or aggressive language demanding immediate payment are strong warning signs of potential scam IRS letters.

Verify contact information

All IRS phone numbers and website addresses should match those on its official websites, and a specific IRS notice number or reference code may be at the top or bottom of the letter.

If you’re unsure whether a letter is legitimate, reach out to an IRS agent through the contact methods shown on IRS.gov.

Seek additional help

If you encounter an IRS impersonation scam involving someone pretending to be official tax administration personnel, you can report it through the IRS Impersonation Scam Reporting site. Find more information on the official IRS page about common scams.

You can also report fraud to the Federal Trade Commission (FTC) at ReportFraud.ftc.gov. If a scam involves threats or potential identity theft, file a report with your local police department as well.

If you suspect you may be the victim of an identity thief, check out the FTC’s website at IdentityTheft.gov for helpful resources and steps to take for recovery.

The impact of IRS scams 

IRS scams can have significant, long-lasting consequences, often starting with financial fallout. Victims frequently send unrecoverable payments or share personal information that lets fraudsters get a hold of their funds through other means.

For example, that may include:

• Draining existing bank accounts
• Opening unauthorized lines of credit
• Filing fraudulent returns to steal refunds

In addition to causing financial damages, this can negatively impact your credit score as scammers take out loans and rack up debt in your name. You may find yourself unable to qualify for new credit accounts yourself until you’ve resolved the issue.

Unfortunately, resolution can take months or even years, and the process is often emotionally stressful. There’s a lot of red tape to navigate, and you’ll likely be experiencing increased financial strain due to the damages you’ve suffered.

As a result, it’s best to focus on avoiding these scams in the first place. An ounce of prevention is worth a pound of cure. Once the damage has been done, it’s a long road to recovery, even in the best of circumstances.

Stay vigilant against IRS scams

To protect yourself from scams, don’t respond to suspicious communications in any way—don’t send money, click links, or reveal personal information. If you suspect a breach, update the passwords on financial and email accounts.

Additionally, monitor your credit report for anything unusual and consider implementing a fraud alert. It’s also worth regularly reviewing official IRS guidance on the latest popular forms of tax fraud.

If you believe you’ve been the target of IRS tax scams, never hesitate to contact the authorities or tax professionals and financial advisors.