Identifying AI tax scams

A new and overwhelming round of tax scams is hitting the American public and sophisticated AI tools are at the helm. Tax scams are not new. Thanks to e-filing changes and taxpayer specific pin identification, tax fraud scams have been reduced in recent years.

A new threat is forming now as tools like ChatGPT become increasingly popular and law makers are urging the IRS to address the threat.

Every year the IRS makes public announcements to warn taxpayers of prevalent scams. Taxpayers are reminded that the IRS only communicates via mail unless you have been assigned a specific agent, which they send in a letter first. Thousands of taxpayers however, still find themselves falling for text and phone call scams costing millions of dollars cumulatively.

Before ChatGPT, most false communication could be more easily identified by things like spelling and grammatical errors, letters not coming on IRS letterhead, or asking simple questions of the person on the other end of the phone, like what their agent ID number was. But now senators are concerned that ChatGPT is making it easier than ever for scammers to get their scams right.

ChatGPT has the ability to write flawless letters and emails alike, even correctly referencing internal revenue code and correct IRS office addresses. Additionally, a scammer on the phone can prompt the app to provide it with accurate information to relay to a vulnerable caller, making it increasingly more difficult for taxpayers to identify what’s real and what’s not.

Vulnerable taxpayers become easily stressed out when they are being threatened with liens and jail time for not addressing their tax issues. Additionally, the number of ERTC credit phone calls has increased tenfold and simply asks the taxpayer to “confirm” their personal identification numbers.

When technology makes it easier than ever for scammers to sound knowledgeable and quick in their replies, it enhances the legitimacy to the taxpayer involved.

Voice recognition software has also been linked to fraud schemes more frequently in recent years, where it’s now easier than ever for impersonation to be happy on phone calls. All this has prompted some US senators to reach out to the IRS and new commissioner Werfel asking for a written plan as to how the agency plans to combat the rise in tax scams and the enhanced technology.

Practitioners can help protect their clients but reiterate not to respond to text messages and phone calls that are seemingly from the IRS and aways request that clients let you review a copy of written notices before they respond.