Attorney General James Offers Tips to Protect Consumers from Fraud During Tax Season

 

AG James Encourages New Yorkers to Beware of AI-Powered Tax Scams and Report Suspicious Activity to Her Office

New York Attorney General Letitia James issued a consumer alert to warn New Yorkers about tax preparation frauds and to provide tips to avoid common scams during tax season. While scams can take many forms, consumers should be particularly aware of those using artificial intelligence (AI) technologies. With two weeks until Tax Day, Attorney General James is encouraging New Yorkers to stay vigilant to protect their personal and financial information and report suspected scams to the Office of the Attorney General (OAG).

“Scammers are increasingly using sophisticated AI programs to create more deceptive schemes this tax season,” said Attorney General James. “As New Yorkers file their taxes, I encourage everyone to be on the lookout for scammers who try to steal their money and personal information. I encourage everyone to follow the tips from my office and contact us immediately if you believe you have been targeted or victimized by a scam.”

Attorney General James is warning New Yorkers about AI-powered tax scams, including:

• Fake videos of government officials or celebrities providing false tax information. AI allows scammers to quickly and easily create lifelike videos of well-known figures who may push fake tax incentives or deductions, or otherwise convince unsuspecting victims to give up money or sensitive information.
   
• Tax-related phishing emails. AI technology allows attackers to send highly convincing, personalized emails disguised as tax notices or tax preparation offers to steal users’ personal information. Previously, these emails may have been identifiable by typos or awkward grammar, but AI can make phishing emails extremely difficult to detect.
   
• Clone phone calls. Scammers can use AI to pretend to be an IRS official or a tax preparer. New technology allows users to copy and replicate voices and images to create believable, lifelike impersonations of tax professionals or people in official positions. Scammers may manipulate the caller ID so that the call appears to come from a recognized number and may reference information from a victim’s recent credit card transactions to appear legitimate. New Yorkers should be wary of surprise calls from people claiming to be affiliated with the tax return or refund process who demand money or sensitive information.
   
• False information in Google’s AI Overview. Scammers can manipulate results in Google’s AI Overview to show false phone numbers or links alongside legitimate information. Users searching for tax return-related assistance or information are more likely to find accurate information in non-AI-created web entries on trusted websites, which should appear below the Google AI Overview.

Other common tax season scams that New Yorkers should also be on the lookout for include:

• Fraudsters who claim you owe past tax debts and insist that you pay using a prepaid credit card, gift card, or cryptocurrency. Legitimate government officials and agencies do not seek to collect debts through these means.
   
• Being told that your legitimate tax refund from the U.S. Internal Revenue Service (IRS) was a mistake and therefore you must return it. If you owe money, you will receive a legitimate notice in writing that identifies the agency and the reason you owe money, not a phone call, email, or text message.
   
• Fraudsters who make false promises of free tax preparation services, only to deceive people into paying for those services.
   
• Tax preparers who deceptively claim to get you your tax refund quicker and then charge you high interest rates and fees.
   
• Tax preparers who provide loans to pay taxes and charge more than the amount charged by the IRS for entering into an IRS-provided payment plan or installment agreement with similar terms.   
   
• Any unsolicited calls, text messages, or emails asking for personal information or to verify financial account information.

Attorney General James offers the following tips for New Yorkers to protect themselves during tax season:

• If you receive an unsolicited call from someone you suspect may be a scammer, hang up and call them back on a trusted phone number.
   
• Thoroughly vet any unanticipated email addressing tax obligations or offering tax assistance before taking any action to ensure it is legitimate.
   
• Legitimate government organizations will never threaten arrest or deportation for failure to pay a debt and will never insist that consumers pay a debt only via a prepaid credit card, gift card, wire transfer, or cryptocurrency.
   
• No matter who you use for tax prep, if they offer you a loan to pay taxes owed, make sure to review the fine print. The IRS offers low-cost loans and payment plans, so be sure to compare all of the terms.
   
• Ensure that any offers you receive on “free” tax preparation services are actually legitimate and free of charge, such as the IRS Free Filing. There are Volunteer Income Tax Assistance (VITA) sites, where consumers can get their tax returns prepared free of charge.
   
• If using a tax preparer, check the person’s qualifications and history through the Better Business Bureau. You should ensure that they sign the tax form and include their Preparer Tax Identification Number (PTIN) upon completion. Also ensure that you are given a statement of the tax services provided, and pay close attention to any extra fees or interests. For more information, consult New York’s Consumer Bill of Rights Regarding Tax Preparers.  

Any New Yorker who suspects that they are a victim of a scam is encouraged to report it to OAG by submitting a complaint online or calling 1 (800) 771-7755. Tax scams should also be reported to the U.S. Treasury Inspector General for Tax Administration at 1 (800) 366-4484.