Demystifying Tax Fraud: How to Avoid Falling Victim to Deceptive, Costly Scams This Tax Season

Tax season is upon us. With the Internal Revenue Service’s (IRS) tax filing deadline for 2019 approaching and many taxpayers rushing to file their returns, cybercriminals are preparing to cash in on the tax season with sophisticated social engineering exploits. 

Every year threat actors capitalize on the tax season, using it as an opportunity to deceive taxpayers into handing over personal information, credentials and, in many cases, large sums of money. Attackers utilize an array of sophisticated techniques including phishing, ransomware, online banking trojans, spyware and fake IRS phone calls or online services to trick their victims - and these tactics are often successful. In 2018, fake IRS calls cost 12,000 victims a total of $63 million in losses.

Small businesses are especially vulnerable to tax fraud and other email-borne threats because they often lack the resources to invest in and implement an effective email security strategy. Cybercriminals are taking advantage of this achilles heel and are directing many of their attacks at small- and medium-sized businesses. Research by Small Business Trends reveals that small businesses are the target of 43% of all cyberattacks. Is your business email an open door to cyber thieves this tax season? 

How Do Tax Scams Work?

IRS tax fraud is usually initiated with a phony email pretending to be from the IRS. These fraudulent emails frequently redirect users to malicious websites, and sometimes contain malicious attachments such as malware or remote access trojans (RATs). These scams are designed to steal personal information which can either be sold or used in account takeovers.

It is important to note that while the majority of tax scams involve phony emails claiming to be from the IRS, some fraudulent emails employ different tactics to exploit taxpayers. W2 scams are another common and dangerous method of attack. In these scams, threat actors send fraudulent emails that appear to be from an executive or organization leader to payroll or human resources employees. Through the use of deceptive social engineering techniques, attackers are often able to convince employees to hand over W2 forms and sensitive employee information. This data is invaluable to identity thieves and can be used to file fraudulent tax returns. 

How to Protect Against IRS Impersonation Scams and Tax Fraud

Since email is the primary attack vector used in IRS tax scams, an effective email security strategy is imperative in protecting yourself and your business this tax season. Implementing a comprehensive, fully-managed business email security solution that identifies malicious email in real-time is the most effective way to mitigate the risk of IRS tax fraud. Other tips for protecting against tax fraud include:

• Never click on links or open attachments that come from suspicious or unexpected sender addresses.
• Be on the lookout for terms like “money laundry” and “tax collection agency” in the subject and the body of messages you receive - attackers often use this type of language to evade “IRS” spam filters.
• Check for errors in spelling and grammar - these errors can be indications of fraud.
• If you receive a phone call from someone claiming to be from the IRS and you do not owe tax, or if you are aware that it’s a scam, hang up immediately. If you receive a phone call from someone claiming to be with the IRS, and you owe tax or think you may owe tax, do not give out any information. Call the IRS at 1.800.829.1040 to find out more.
• Immediately report all unsolicited emails from IRS-related components to the IRS at This email address is being protected from spambots. You need JavaScript enabled to view it..
• Use strong passwords to protect your accounts. Utilize two-factor authentication (2FA) or multi-factor authentication (MFA) whenever possible.
• Subscribe to Guardian Digital’s Behind the Shield newsletter - if you haven’t already - to stay informed on the latest email-borne threats and trends and receive tips on how to improve your business’s security posture.

Finally, it is important to be aware of the things that the IRS will never do. Knowing these facts can be very helpful in differentiating legitimate emails from phony messages claiming to be from the IRS. The IRS will never:

• Initiate contact via email to request sensitive information
• Ask you to share credit or debit card information over the phone or via email
• Email you regarding the status of refunds
• Call and demand immediate payment without first having sent a bill
• Require you to use a specific payment method
• Demand payment without giving you the opportunity to question or verify the amount you owe
• Threaten to bring law enforcement to arrest you for not paying.

How to Recognize Phishing, Impersonation and Fraud This Tax Season

The images below are examples of fraudulent emails quarantined by Guardian Digital EnGarde Cloud Email Security. At first glance they may appear to be legitimate; however, there are various "red flags" that indicate fraud. In the image to the left, the subject is vague and the email contains grammatical errors. The sender also uses generic language such as "tax collection agency" and "money laundry" to avoid detection by spam filters. Both emails contain malicious attachments that would infect a user's computer, potentially leaving them vulnerable to ransomware or loss of confidential information on their computer and any computers connected to it.

 How Guardian Digital Can Help

Guardian Digital’s premier business email security solution, EnGarde Cloud Email Security, offers adaptive, threat-ready protection against advanced email attacks including impersonation scams, credential theft, account takeovers and wire fraud. 

Through a collaborative, transparent approach to development, expert engineering, and decades of industry expertise, EnGarde makes enterprise-grade email protection available to SMBs. Centrally-hosted and fully-managed, Guardian Digital EnGarde Cloud Email Security provides complete, multi-layered email vigilance. EnGarde seamlessly integrates with businesses’ existing email infrastructure and is accompanied by expert, caring around-the-clock customer support services - providing you with the convenience and peace of mind to focus on aspects of business besides email security. 

Key features of EnGarde Cloud Email Security’s protection include:

• Next-generation protection against social engineering and impersonation attacks using advanced intelligence techniques to recognize both existing and emerging threats in real-time
• Neutralizes threats associated with malicious attachments and links using cutting-edge URL filtering and scanning of broad file types including RTF files, Batch files, and VBS files
• Complete, end-to-end email protection with advanced email encryption and sender authentication protocols 
• Scalable, customizable cloud-based system simplifies deployment and increases availability
• Exceptional 24x7x365 customer support services that eliminate the headaches commonly associated with traditional “tech support”

Interested in learning more about how Guardian Digital can help protect your business’s information, reputation and assets this tax season? Speak With a Security Expert Today