Helping Elderly Clients Avoid Tax Scams - 07-01-25

Taxes are scary enough before crooks get involved. And just like any tool ever invented by humans, it wasn’t long before technology became the plaything of scammers looking to pull off cons. 

Elderly clients who often have large life savings can be easy targets for scams, whether because of social isolation or emotional and cognitive problems, or maybe just because they didn’t keep up with the latest, frequent IRS or FBI warnings about being careful on the internet. Some elderly victims learn too late that it takes serious effort to resolve thefts of money – and potentially years to fix identity theft.

These clients need to be extra vigilant. Listen in to learn what to tell them.

This podcast is meant for entertainment purposes only. For the more thorough, complete, and accurately written version of this article which includes citations, visit us at http://www.tottb.tax

Transcript

Okay. Welcome. For all of you listening in CPAs, EAs, tax lawyers, you know, your daily work is already incredibly complex. Right? Navigating the maze of of tax regulations, deadlines.

It's a lot. It really is. But what happens when that professional world crashes into something, well, darker? I'm talking about the world of financial scams, especially the ones targeting our most vulnerable clients, like the elderly. Yeah.

It's a really disturbing intersection. You've got sophisticated financial fraud meeting, vulnerabilities that might be emotional, cognitive, or simply down to social isolation. Right. And for you, as tax professionals, this pushes beyond just, you know, filing returns. It's about stepping up as a key protector of your client's financial health.

Exactly. And that's really the heart of our deep dive today. We wanna get into a kind of shortcut to understanding the newest threats out there. Uh-huh. We're aiming to arm you with real practical knowledge so you can shield your elderly clients from these scams, which honestly seem to get more sophisticated all the time.

They really do. So we'll be unpacking insights from, various sources that lay out the scope of the problem, how these scammers operate now, and maybe most importantly, what you and your clients can actually do about it. And what makes your role so critical here is that position of trust you already hold. Mhmm. Clients look to you for financial guidance, sometimes beyond just the tax forms.

Yeah. So this deep dive, it's about giving you the tools to be that frontline defense. Okay. So let's get into it. This alarming landscape of elder fraud.

Why are older clients targeted so often? The sources point to a few painful reasons. Well, for one, they've often accumulated life savings, which sadly makes them a bigger prize for criminals. Makes sense, unfortunately. Yeah.

And then you add in factors like maybe social isolation, which can make people more receptive to unexpected contact. Plus, you might have some potential emotional or, cognitive issues sometimes. And just keeping up with technology too. Right? Like, all the constant warnings from the IRS or FBI about online threats, it's hard for anyone.

Absolutely. Yeah. And the fallout isn't just the money lost right then and there. That's bad enough. But what are the deeper impacts?

That's a crucial question. What do the sources say about that? Well, they make it clear that getting sole money back is tough. Sure. But untangling identity theft, that can take years.

Imagine that burden on an older person. Years. Wow. Especially if they have fewer resources or less energy to fight that battle. Exactly.

And the numbers, when you look at the scale of this, they are just, staggering. Tell us about that. What kind of scale are we talking about? Okay. So the FBI's Internet Crime Complaint Center, that's IC three.

They got nearly 860,000 complaints last year alone. Almost a million complaints. Yeah. And here's the really chilling part. Even though the number of complaints dipped slightly, the total reported losses shot up to $16,600,000,000.

Billion with a b. Wow. So the scams are getting more effective, more damaging. It certainly looks that way. And when you drill down into the impact on older Americans, it's even more stark.

The number reporting loss is over a $100,000. That's more than tripled since just 2020. Tripled. That's incredible. It is.

In 2023, about 4,600 adults, aged 60, reported losing 6 figures. And specifically for tax scams, people aged 65 to 74, they face a bigger risk of large losses. We're talking averages up to a thousand dollars for men, and get this, $5,000 for women. $5,000. For an older woman, potentially on a fixed income, that's devastating.

That could be essential living expense. Absolutely. And it's so much harder to earn that back at that stage of life. Plus, there's a strong feeling that these numbers are probably low. Why is that?

Under reporting. Exactly. The sources really highlight this. Many victims, you know, whatever their age, just don't report. They might feel embarrassed, ashamed, or just hopeless about getting the money back.

It's tough. And that silence, it helps the scammers keep going, doesn't it? It really does, which again underlines your role. Being that trusted person they can talk to without judgment is just massive. Okay.

So given how big this problem is, just being aware isn't enough for us as professionals. We need to know their playbook. What are the core tactics tactics we need to understand? That's the million dollar question, isn't it? Mhmm.

Or maybe the $16,600,000,000 question. What's fascinating is that even with AI giving scammers, like, unbelievable new tools Like, what kind of tools? Oh, perfecting voice cloning, creating fake websites that look incredibly real, all sorts of things. But even with all that tech, the basic psychological tricks they use, they're pretty timeless. It's old manipulation with a high-tech gloss.

So familiar patterns underneath the new tech, what are those universal red flags then? The things we should train ourselves and our clients to spot immediately. Okay. Number one, urgency or threats. Scammers always try to create a crisis.

Pay now or you'll be arrested. Your account is compromised. Act immediately. They wanna rush you, stop you from thinking. Panic mode.

Exactly. Number two, secrecy. They'll often say, don't tell anyone about this call. Not the police, not your family, not even your financial adviser. That is a huge flashing red light.

Right. If it's legitimate, why the secrecy? And what about payments? That's often a giveaway, isn't it? Oh, absolutely.

That's number three. Unusual payment methods. They insist on gift cards, like, seriously, who pays taxes with gift cards or wire transfers, crypto, peer to peer apps like Zelle or Venmo. Which as tax pros, we know the IRS or any government agency would never demand. That's crucial client education right there.

Crucial. And the last big flag Yeah. Subtle deception. Tiny changes in email addresses, you know, like IRS dot gov dot com instead of IRS dot gov or slight misspellings in URLs. Easy to miss if you're not really looking.

Got be eagle eyed. Okay. So with those red flags, urgency, secrecy, weird payments, subtle tricks, let's talk specific scams. Impersonation seems like a big one. Huge.

It's a classic, but now often boosted by AI that pretend to be from the IRS, Social Security, Medicare, you name it. Goal is always the same. Steal info, steal money. How do they pressure people? Well, demanding immediate payment for fake tax debts or maybe dangling a fake refund or some prize money.

And they use tech like spoofed caller IDs to look legit. And, you know, it's chillingly similar to the old grandparent scam, the emergency call needing money. But now AI can make the voice sound exactly like the grandchild. It's incredibly deceptive. That is genuinely terrifying.

Okay. What about phishing and smishing? We hear those terms a lot. Yeah. Those are all about tricking you into giving up private info, like passwords or account numbers.

Phishing is usually via email with fake websites, fake logos, messages that look like they're from the IRS or your bank. And smishing Smishing is the same idea, but through SMS text messages. You get a text saying something alarming like your account security is at risk or claim your tax refund now with a link. Click the link and the link. Okay.

You mentioned a newer one too, wrong number text. How does that work? Right. This one's sneaky. It starts innocently.

You get a text like, hey. Is this Sarah? Or your package is delayed or sorry I missed the meeting. Seems harmless. Okay.

So what's the scam? The initial goal isn't usually to scam you right then. It's just to see if your number is active if someone replies. Once they know it's a live number, they might circle back later. To what?

Could be anything. Sometimes it leads into friendly chats, building rapport over time, maybe even turning into a romance scam to eventually drain life savings. It's the long con, starting with just confirming your number. Wow. That's patient and devious.

They're playing the long game sometimes. What about tech support scams? I've heard about those. Yeah. Those require a lot of cooperation from the victim, unfortunately.

It starts with contact, maybe a call, text, email, or a scary pop up on your computer screen pretending to be Microsoft or Apple support. Saying there's a virus or something. Exactly. Or maybe they claim you owed a refund for some subscription. They tell you to call a specific number.

Yeah. And on that call That's where the real manipulation happens. They convince you to download remote access software, letting them control your computer. Then they have you log in to your bank account, supposedly to deposit the refund. Okay.

I see where this is going. Right. They then accidentally deposit way too much money, say, $5,000 instead of $500. Then they act panicked, say they'll get in trouble, and pressure you to send back the extra money immediately. How do they want it back?

Not just a simple transfer, I bet. Nope. Often it's cash, concealed cash shipments. They'll tell you exactly how to wrap it, maybe inside a magazine and where to send it. Sometimes even to specific pharmacies or retail stores that are set up to receive packages for them.

It's incredibly elaborate. That is nuts. The level of planning and psychological pressure is intense. It's not just tech. It's really manipulating trust and fear.

Precisely. And beyond those broader scams, the sources also highlight some tax specific cons aimed right at seniors. Like what? Well, things like bad tax advice spreading on social media. Who?

You know, those viral posts claiming some secret loophole or deduction that's totally fake. People try it, and it messes up the real taxes. Or gets them flagged by the IRS. Right. Then there are scammers offering to help set up an IRS online account at irs.gov.

Big warning here. Irs.gov account setup is free, and you don't need help. They just want your personal info to file bogus returns. Good to know. Free and doable yourself.

Yep. Also, watch out after natural disasters. Fake charities pop up trying to get donations or personal info for identity theft. And what about those offering compromise mills? We see ads for those sometimes.

Yeah. OIC mills. They charge huge fees, promising people they can settle massive tax debts for pennies on the dollar even when the person clearly doesn't qualify for an OIC. An IRS rarely approves those offers anyway. Right?

Exactly. The IRS accepts maybe only about a third of our IC proposals. And importantly, the IRS offers free help to see if you even qualify. These mills just take the fee and deliver nothing. Okay.

This is it's a lot. It really drives home how vital our role as advisers is. It really is paramount. You're perfectly placed to educate and shield your clients. So let's get practical.

What's the proactive advice we should be giving clients straight from the sources? What are the absolute do nots? Okay. First off, never ever download software if some unknown person who contacted you tells you to. Full stop.

Red flag number one. Got it. No surprise. Software download. And tied to that.

That Yeah. Never let an unknown person who contacted you take remote control of your computer. That's like handing them the keys to everything. Makes sense. What else?

Clicks. Links. Definitely advise them. Do not click on random pop ups. Don't click links in unexpected text or emails.

Don't open attachments you weren't expecting, and absolutely do not call phone numbers provided in those suspicious messages. Okay. What about calls claiming to be the IRS specifically? Right. If a client gets an unexpected call from someone saying they're IRS and the client hasn't received any official IRS mail about a problem, tell them to just hang up immediately.

Don't argue. Don't engage. Just hang up. Exactly. Yeah.

And critically, don't call back the number they gave you or the number on caller ID because that could be spoofed. If they're worried, they should look up and call the official IRS customer service number themselves. Good advice. And just a reminder to listeners, we will put all these official contact numbers and reporting website links in the show notes so you don't need to scramble to write them down right now. You'll have them handy for your clients.

Perfect. Because reporting is the next crucial step. Right. We know underreporting is an issue, but reporting does actually help the authorities track and fight these scams. So how should clients report?

Where do they go? The main place is the FBI's Internet crime complaint center, I c three. You file online at ic3.gov. It helps if they have details ready Yeah. Like the scammer's name or company name if they have it, how they communicate to websites, email addresses, phone numbers, and if they sent money, especially cash, any shipping addresses, or recipient names they were given.

Okay. I see 3.gov. Any others? Yes. There's also the Department of Justice's National Elder Fraud hotline.

And for tax specific scams, you can report abusive schemes or preparers using IRS form one four two four two. For IRS impersonation scams, you report those to TGTIAT, the Treasury Inspector General for Tax Administration. GTA. GTA. Okay.

They have an online form specifically for impersonation scams. Again, all these links will be in the show notes, make it easy for you to pass them on. That's really helpful. You know, to really bring home the impact we can have, the source has shared a great example. Let's call a CPA, John, and his client, David.

Okay. So David's 73, retired widower, modest savings, kinda keeps to himself, doesn't have a huge support network. Right. A potentially vulnerable profile. Exactly.

So one day, David gets a call. Caller ID says IRS. The person on the line says David owes $2,000 in back taxes, and he needs to pay immediately via Venmo or give his bank info or they'll issue an arrest warrant. Classic impersonation script. High pressure, immediate threat, a usual payment method.

Totally. David starts to panic, but and this is key. Instead of paying, he hangs up and calls John his CPA. Smart move. Yes.

And John immediately checks, confirms David owes nothing, then John helps David report the call to both the IRS and TGTA. John's calm expertise just diffuse the whole situation. That's fantastic. That's the trusted adviser role in action. Right.

Did the scammers try again? They did. A few months later, David gets a text message, again, supposedly from the IRS. Uh-oh. This time promising a big refund, like 5 figures from a prior year.

All he has to do is click a link to start the claim. The smishing refund scam. Yep. But this time, because of John's previous help, David is way more vigilant. He knows it's bogus.

He deletes the text immediately. Good for Dave. And he tells John about it again, and John helps him report this attempt too. It's just a perfect illustration of how you, the listener, can be that direct line of defense for your client. It really is.

It builds that trust, that relationship beyond just the tax return itself. It shows you're looking out for their whole financial well-being. Absolutely. It's about protection. A powerful connection.

Okay. So let's kinda wrap up this deep dive. The big picture is clear. Thousands of Americans, especially older adults, are targets for these increasingly clever scams every year. Tax scams are a big part of that.

Yeah. And AI is making phishing, smishing those impersonation calls even harder to spot sometimes. Oh. But knowing the basic red flags, that urgency, the secrecy, the weird payment demands, and the common scam methods we talked about, that's powerful knowledge. And your role as their tax professional is just so critical, not just for compliance, but for education, for guidance, for being that person they can call when something feels off.

And please encourage clients to report even if they feel embarrassed, even if the money seems gone. Reporting helps everyone. Your support can make it easier for them to take that step. Don't let them feel ashamed. That's a great point.

So here's a final thought to leave you with. We talked a lot about reacting to scams, reporting them. But how can you, in your practice, proactively weave fraud prevention awareness into your regular client check ins or communications? Think about turning that essential service you already provide into an even more invaluable layer of client protection. How does that deepen their trust in your expertise even further?

Something to mull over.