Spotting Scams: Common Tax Scams

Imagine receiving an email claiming there’s a problem with your tax return. It would likely create instant anxiety, right? As such, you might feel tempted to act quickly to make things right – without taking the time to verify the source of the email.

Tax season is a busy time for many – including scammers. As individuals and businesses rush to file returns and check for refunds, fraudsters take advantage of the surge in activity to launch convincing scams.

During this time, taxpayers are sharing sensitive information with accountants, tax preparation platforms and government systems. Many are also checking their email and online accounts for updates about refunds or assessments. Then there’s the pressure many feel to file correctly and meet deadlines. That stress can make it easier for scammers to create messages that are both convincing and urgent.

This combination of financial urgency, expected communication and high-value data makes tax season a prime opportunity for fraud.

Common tax scams to watch for

Although tactics evolve every year, a few common scams regularly appear during tax season:

• CRA impersonation scams: One of the most common scams involves criminals posing as representatives from government agencies, such as the Canada Revenue Agency. Scammers may call, email or text you, claiming that you owe taxes, are under investigation or qualify for a refund. The message often pressures you to act quickly or provide personal information.
• Phishing and smishing scams: Phishing emails and smishing text messages try to lure recipients into clicking malicious links or providing sensitive information. These messages may claim your return is incomplete, that your refund is ready or that additional documents are required. Clicking the link may lead to a fake website designed to capture your personal information.
• Fake refund scams: Another common tactic is promising a tax refund. Scammers may ask you to confirm banking information to “process” the refund. In reality, they’re trying to collect your financial details for fraudulent use.
• Fake filing websites: Scammers sometimes create websites that closely resemble legitimate tax prep platforms or government portals. If you enter your information on one of these sites, scammers may be able to collect your personal and financial data.

Red flags that signal a tax scam

Recognizing the warning signs can help you avoid becoming a victim of a tax scam. Watch for these common red flags:

• Messages that create urgency or panic, such as threats of legal action or immediate penalties.
• Requests for personal information, including your SIN or banking details.
• Unexpected links or attachments in emails or text messages.
• Requests for payment via gift cards, cryptocurrency or prepaid cards.
• Unsolicited communication with familiar or unfamiliar phone numbers or email addresses.

When something feels suspicious, take time to verify the source before responding.

What to do if you encounter a tax scam

If you receive a suspicious message or call about your taxes, follow these steps:

1. Do not respond before you verify. Scammers create panic and count on you reacting with urgency.

2. Avoid clicking links or downloading attachments. They may contain malware or lead to fraudulent websites.

3. Verify the source. Log in directly to your tax or government organization account or contact them using the phone numbers listed on their official website.

4. Report the incident. Follow the reporting steps outlined below.

5. Delete the message after reporting. Removing the message helps prevent accidental interaction later.

What to do if you’ve been affected by a tax scam

Fallen for a scam? You’re not alone. Here’s what to do if you’ve experienced fraud:

1. Report the incident: Notify your bank and credit reporting agencies.

2. Scan your devices: If you clicked on a link or attachment, it’s a good idea to run an antivirus scan to check for malicious software.

3. Change your passwords: Update passwords for any accounts that might be compromised.

4. Lock down your credit: If you shared personal information with the scammer, it’s a good idea to place a fraud alert on your credit report.

5. Lock or cancel your credit card: If you inadvertently provided the scammer with your credit or debit card information, immediately lock and then cancel your card.

6. Alert others: Warn friends and family so they don’t fall for the same scam.

Our complete Digital Safety and Scams booklet includes a detailed directory of reporting contacts in Canada, the United States and the United Kingdom, along with key credit bureau and banking information.

Tax scams are successful because they blend in with legitimate tax season communication and take advantage of a moment when people are dealing with questions and deadlines. By recognizing common warning signs, verifying communications and taking action when something seems suspicious, you can better protect your personal and financial information.

For more tips on protecting your financial information during tax season, read our article, Tax Tips: How Taxpayers can Protect their Data this Season.

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