The IRS Rings the Alarm: Don’t Fall for the Form W-2 Scam
In March 2023, the Internal Revenue Service (IRS) issued a consumer alert highlighting a particularly worrying trend: new scams urging taxpayers to falsify Form W-2 wage information to claim inflated tax refunds.
What’s the Scam?
This scheme—circulating mainly through social media—encourages individuals to fabricate large income and withholding figures on Form W-2 and even invent a fake employer. The scam promises massive refunds—sometimes reaching five figures—by submitting bogus tax returns electronically.
How the IRS Fights Back
The IRS, working in tandem with the Security Summit (a coalition including state tax agencies, payroll companies, and tax professionals), is actively monitoring and verifying W-2 information. This involves cross-checking filings with payroll data, SSA records, and other sources.
The Consequences
The risks are steep. Taxpayers caught filing such false returns can face:
- A frivolous return penalty of $5,000
- Criminal prosecution, in addition to potential civil penalties
If the IRS flags your W-2 data as unverifiable, your refund may be frozen. The IRS may issue notices like CP05A, requesting proof of income and withholding. Failure to provide documentation can lead to refund denial.
Red Flags to Watch For
- “Guaranteed” big refunds or “secret tricks”—these are almost always scams.
- Financial advice from unverified social media sources can be dangerously misleading. The IRS urges taxpayers to rely only on official guidance or licensed tax professionals.
What Should You Do Instead?
- Always file accurate returns. Don’t be tempted by shortcuts or shady promises.
- If you’ve already submitted a questionable return, consider amending it or consulting a reputable tax professional.
- Use only IRS.gov and trusted sources for tax guidance—ignore suspicious social media tips.
- If you suspect a scam, or if you’re targeted by suspicious communications, report it:
- For phishing or fake W-2 requests, email phishing@irs.gov, or if you’ve sent information, also reach out to dataloss@irs.gov.
Bottom Line
There’s no shortcut for getting a massive tax refund. The IRS already has the means to verify reported wages, and making up numbers only leads to severe consequences. Always file honestly, stay informed from legitimate sources, and when in doubt, consult a trusted tax professional.