Technology
How scammers use AI tools to file perfect-looking tax returns in your name
When you think of “tax fraud,” you probably think of people who find ways not to file their taxes honestly. But with the advancement of artificial intelligence, there’s a new type of tax fraud out there.
This one involves hackers using a form of identity hijacking to file a tax return in someone else’s name and get the refund sent to them.
The dark web is revealing that tax fraud is on the rise. Here’s what you need to look out for to avoid becoming a victim.
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Post-it note on a tax form (Kurt “CyberGuy” Knutsson)
What is AI-powered fraud and identity hijacking?
AI-powered fraud is when hackers utilize AI’s abilities to commit sophisticated acts of fraud. One type of AI-powered fraud is known as identity hijacking, which is when hackers not only steal someone’s identity but impersonate them in all sorts of ways. One example is through deepfakes, which can have scary consequences for more than just the person being impersonated.
WHAT IS ARTIFICIAL INTELLIGENCE (AI)?
Another is through AI tax fraud, which is when the hacker uses AI to take your sensitive information and use it to ultimately get your tax return sent to them.
But how exactly do they do this?
Laser scanner over a person’s face (Kurt “CyberGuy” Knutsson)
MORE: DON’T FALL FOR THESE SNEAKY TAX SCAMS THAT ARE OUT TO STEAL YOUR IDENTITY AND MONEY
How fraudsters are using AI to commit tax fraud
This new type of tax fraud was reported by the CEO of LexisNexis Risk Solutions’ Government group, Haywood Talcove, a cybersecurity and data analysis company.
The acceleration of fraud through AI
Historically, tax fraud has involved the use of stolen Personally Identifiable Information (PII), which refers to data that can be used to identify you. It includes both sensitive and non-sensitive information.
Sensitive PII: Full name, Social Security number, driver’s license, mailing address, credit card details, passport information, financial records and medical history. Companies often use anonymization techniques to protect sensitive PII when sharing data.
Non-sensitive PII: Zip code, race, gender, date of birth and even information available on social media sites. While non-sensitive PII is less critical, it can still contribute to identifying you.
Thanks to AI, criminals can now more efficiently exploit stolen (PII) Personally Identifiable Information for fraudulent activities.
The process: From PII theft to fake IDs
Hackers may acquire PII through various means, such as phishing scams or malware. This information is then used to create fraudulent IDs, complete with the victim’s details but the fraudster’s photograph.
Exploiting facial recognition for IRS access
With a fake ID in hand, fraudsters can bypass the IRS’s facial recognition security measures, allowing them to file tax returns in the victim’s name and redirect refunds to their accounts.
IRS documents (Luke Sharrett/Bloomberg via Getty Images)
The call for enhanced verification measures
Experts are urging government agencies to implement more robust verification processes, such as cross-referencing IDs with DMV records, to combat this sophisticated form of tax fraud.
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How to determine if someone filed a tax return in your name
When the IRS identifies issues with your tax return, it will send you a letter before issuing any refunds. This notification provides an opportunity for you to flag the initial return as fraudulent and proceed with filing normally.
The IRS employs systems to detect suspicious returns. However, if its algorithms fail to identify anomalies and process a fraudulent return, you won’t discover it until you attempt to file your own return and encounter rejection.
In most cases, the second option is more common. Taxpayers typically receive an e-file rejection notice, which indicates a problem. Unfortunately, these notifications lack specific details. Instead, they merely highlight an issue related to the Social Security number. If you haven’t accidentally transposed any digits, it’s likely that tax identity theft caused the rejection.
What happens after the scammer files a fake tax return in your name?
The primary consequence of a fake tax return is the theft of your tax refund. The scammer essentially impersonates you and diverts your rightful return into his bank account. But the trouble doesn’t stop there. When you try to file your legitimate return, the IRS system will likely reject it due to a duplicate filing. This throws you into a bureaucratic maze to resolve the issue and prove your identity.
Adding to the frustration, tax identity theft is a growing crime, and the IRS processes for resolving these situations are still evolving. This can mean extended delays and uncertainty while you straighten things out.
Scam written on tax documents (Kurt “CyberGuy” Knutsson)
MORE: HOW IMPOSTERS ARE TRYING TO EXPLOIT YOUR GRIEF AND WALLET IN A NEW FUNERAL SCAM
6 ways to protect yourself from AI tax fraud
Again, since this is a relatively new scam, cybersecurity experts are still learning a lot about what it looks like and, therefore, how to mitigate it. However, now that you are aware it’s out there, here are six things you can do to keep yourself safe.
1. File your taxes as early as possible. If you beat them to it, they can’t commit the fraud.
2. Never share your personal information, especially your Social Security number or other PII information, on messaging apps or during a phone call with someone you don’t know. Many phishing attempts lead people to give this information away before they’ve even realized what has happened.
3. Use strong passwords and reset them often. Create strong passwords for your accounts and devices, and avoid using the same password for multiple online accounts. Consider using a password manager to securely store and generate complex passwords. It will help you to create unique and difficult-to-crack passwords that a hacker could never guess.
4. Use an identity theft protection service: Using an identity theft protection service can be a crucial step in safeguarding yourself against tax fraud. Identity theft companies can monitor personal information like your Social Security number, phone number and email address and alert you if it is being sold on the dark web or being used to open an account. They can also assist you in freezing your bank and credit card accounts to prevent further unauthorized use by criminals. See my tips and best picks on how to protect yourself from identity theft.
5. Don’t click on links or files when you don’t know what they are, even if they are from a trusted friend. That friend could have been hacked, and now someone is after you. The best way to protect yourself from clicking malicious links that install malware that may get access to your private information is to have antivirus protection installed on all your devices. This can also alert you of any phishing emails or ransomware scams. Get my picks for the best 2024 antivirus protection winners for your Windows, Mac, Android & iOS devices.
6. Do your best to make sure your sensitive data is not easy to find online. While no service promises to remove all your data from the internet, having a removal service is great if you want to constantly monitor and automate the process of removing your information from hundreds of sites continuously over a longer period of time. Check out my top picks for removal services here.
If you suspect you’ve been a victim of tax fraud, the official IRS website provides step-by-step guidance on how to handle the situation.
Kurt’s key takeaways
It’s no doubt scary to think about all the different ways hackers and scammers can take advantage of you. And because AI is making their work easier, it’s hard to keep up. What will they think of next? That’s why, here at CyberGuy, we do our best to keep you up to date on the latest hacking news, so you can stay one step ahead of the crooks.
In light of the growing threat of AI-powered fraud, what additional security measures do you think the government should implement to safeguard your personal information? Let us know by writing us at Cyberguy.com/Contact
For more of my tech tips and security alerts, subscribe to my free CyberGuy Report Newsletter by heading to Cyberguy.com/Newsletter
Ask Kurt a question or let us know what stories you’d like us to cover
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Copyright 2024 CyberGuy.com. All rights reserved.
Though Tim Cook is shedding his CEO title for the role of Apple’s executive chairman, it appears he’ll keep one of his most important duties: that of the company’s Trump whisperer.
“As executive chairman, Cook will assist with certain aspects of the company, including engaging with policymakers around the world,” Apple writes in a press release. Translation: he’s sticking around to deal with thorny political relationships — in particular the one with President Donald Trump.
Throughout his tenure, Cook has navigated Apple through tricky political terrain. He’s had to balance the company’s massive business interest in China with US policymakers’ concerns, and he’s worked to appease Trump for favorable regulatory decisions, without alienating too many Apple employees and customers in the process.
Cook has navigated Apple through tricky political terrain
The task of wooing Trump has repeatedly placed Cook in embarrassing situations: Cook showed the president around a factory in Texas in 2019, where Trump wrongly boasted that because of his policies, Apple was building a new manufacturing plant in the US. Last year, he presented Trump with a symbolic gift of “Made in the USA” glass from Apple supplier Corning set in 24-karat gold.
Recently, Cook took criticism from Trump critics for attending a movie night at the White House, for a screening of the documentary Melania, the same day that Alex Pretti was killed by federal agents on the streets of Minneapolis during a protest against Immigration and Customs Enforcement. Cook later vaguely referred to the “events in Minneapolis,” and referenced a “good conversation with the president.”
As Apple’s senior vice president of hardware engineering John Ternus takes over as CEO, the company will need to overcome significant policy challenges, including global efforts to regulate AI, and a push for app stores to verify user ages. Lucky for Ternus, Cook will still be there to take on that job.
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Just about every day, we receive emails from readers who have encountered new scams. Many involve cryptocurrency. The pattern keeps repeating. Someone receives a message that feels urgent, emotional or exciting. The person on the other end sounds confident and persuasive. Before long, the victim is being asked to send money through cryptocurrency. Once the money is sent, it often disappears forever.
Cryptocurrency appeals to scammers for a simple reason. Transactions move quickly, often cross international borders and usually cannot be reversed once completed. That combination makes crypto payments especially attractive to criminals.
Kate recently wrote to us with a great question.
“Could you do an article that illustrates the scripts used by scammers to lure people to send money using cryptocurrency. Those scripts must be very convincing to get so many reasonably intelligent people to send money. Maybe five or six examples of the scripts, so people, especially seniors, will know what to watch out for.”
Kate is absolutely right. These scripts are convincing because scammers practice them constantly. They use psychology, urgency and emotion to push people toward quick decisions.
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Crypto scammers use polished scripts built on urgency, trust and emotion to pressure victims into sending irreversible payments. (gpointstudio/Getty Images)
Let’s break down some of the most common crypto scam scripts, so you know what they sound like before they reach your inbox or phone.
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The investment opportunity script
This script often begins with a friendly introduction through social media, email or even a text message.
Example script:
“Hi, I work with a private investment group that trades cryptocurrency. We’ve helped many people earn steady returns. If you invest $500 today, you could earn $5,000 within weeks. I can show you proof of other investors’ success.”
The scammer may send fake screenshots of profits. Some will even allow a small withdrawal early on to build trust. Eventually, they push the victim to send larger deposits. Once the larger transfer is sent, the account suddenly stops responding.
The romance crypto script
This scam often starts with a simple message on a dating app, Facebook or Instagram. The first contact is friendly and low-pressure.
Example initial script:
“Hi, insert name here, I hope you don’t mind me saying hello. Your profile caught my attention, and you seem like a very kind person. How has your day been?”
After a few days of conversation, the scammer begins sharing details about their life. They often claim to work overseas as an engineer, doctor or business owner. Eventually, they mention cryptocurrency trading as something they do on the side.
Later message in the script:
“I have been doing some short-term crypto trading after work. It has helped me save a lot faster. If you are interested, I can show you the platform I use. It is very easy to start with a small amount.”
From there, the scammer guides the victim to a fake trading site or asks them to transfer cryptocurrency to a wallet they control. At first, the account may show fake profits. The victim believes the investment is working and sends more money. Eventually, the victim cannot withdraw any money.
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From romance schemes to fake government threats, scammers often follow repeatable crypto scripts designed to sound convincing. Knowing the pattern can help you stop the fraud early. (Nhac NGUYEN / AFP via Getty Images)
The government impersonation script
Scammers often pretend to represent government agencies or law enforcement.
Example script:
“This is an urgent notice regarding your tax account. Your Social Security number has been linked to suspicious activity. To prevent legal action, you must verify your identity and pay the outstanding balance today using cryptocurrency.”
Government agencies do not demand payment through cryptocurrency. The goal is to scare you into acting quickly without checking the facts.
The tech support emergency script
This scam often begins with a pop-up warning or an unexpected phone call.
Example script:
“Your computer has been compromised by hackers. Your bank information may be at risk. To secure your system, we need you to transfer funds temporarily into a protected cryptocurrency wallet.“
The scammer claims the funds will be returned once the system is secure. In reality, the transfer moves the money directly to the criminal.
The crypto giveaway script
This scam frequently appears on social media or video platforms.
Example script:
“We are celebrating a new crypto launch. Send 0.1 Bitcoin to this wallet, and we will immediately send back double the amount.”
The message may appear to come from a well-known company or public figure. The wallet address belongs to the scammer. Anyone who sends funds receives nothing in return.
The fake recovery service script
This scam targets people who have already lost money.
Example script:
“We specialize in recovering stolen cryptocurrency. Our investigators located the wallet that received your funds. To begin the recovery process, we require a small crypto payment to unlock the legal tracing tools.”
The victim believes they are hiring professionals to recover their money. Instead, they are being scammed again.
Why these scripts work so well
These scams succeed because they exploit human behavior. First, they create urgency. Victims feel pressured to act quickly.
Second, they create trust. The scammer may sound friendly or sympathetic.
Third, they promise rewards. Investment scams offer profits that feel life-changing.
Finally, cryptocurrency adds confusion. Many people are still learning how it works. Criminals take advantage of that uncertainty.
Understanding these scripts is the first step to protecting yourself. Once you recognize the patterns scammers use, it becomes much easier to stop the conversation before money is involved.
How to protect yourself from crypto scams
Crypto scammers rely on urgency, trust and confusion to pressure victims into sending money. These practical steps can help you recognize warning signs and avoid costly mistakes.
1 CLICK COST A FATHER $4 MILLION IN BITCOIN TO VISHING SCAMMERS
Criminals favor cryptocurrency because transactions move fast, cross borders easily and usually cannot be reversed. That makes crypto a powerful tool for scammers. (Mario Tama/Getty Images)
1) Slow down when money is involved
Scammers depend on urgency to push victims into fast decisions. If someone pressures you to send money immediately, treat it as a warning sign. Pause the conversation and verify the situation independently. Contact the company, agency or person through a known phone number or official website. Taking even a few minutes to step back can stop a scam before money leaves your account.
2) Never send cryptocurrency to someone you do not know
Cryptocurrency transactions work very differently from credit cards or bank transfers. Once funds are sent, they usually cannot be reversed. Scammers prefer crypto because it moves quickly and often crosses international borders. If someone asks for payment through Bitcoin, Ethereum or another digital currency, assume the request is suspicious until proven otherwise.
3) Verify investment opportunities independently
Many crypto scams promise fast profits or guaranteed returns. Legitimate investments never guarantee profits. Before investing, search the company name, website and contact information online. Look for warnings from regulators or consumer protection agencies. If you cannot find reliable information about the company, that is a major red flag.
4) Use strong antivirus software on your devices
Scammers frequently use phishing links, fake websites and malicious downloads to trick victims. Strong antivirus software can help detect these threats before they cause damage. Strong antivirus software can warn you about suspicious websites, block malicious downloads and help stop phishing attempts that try to steal your financial information. Get my picks for the best 2026 antivirus protection winners for your Windows, Mac, Android and iOS devices at Cyberguy.com.
5) Reduce the personal information scammers can find online
Scammers often research their targets before sending messages. They may gather details from public records, social media or data broker websites. Limiting the amount of personal information available online can make it harder for criminals to craft convincing messages. Removing your data from people search sites with a data removal service can reduce the chances of becoming a target. Check out my top picks for data removal services and get a free scan to find out if your personal information is already out on the web by visiting Cyberguy.com.
6) Be cautious with online relationships
Romance scams often begin with friendly messages on dating apps or social media. Over time, the scammer builds trust and eventually introduces a crypto investment opportunity. If someone you have never met begins discussing cryptocurrency investments or asks you to move money, take a step back. Real relationships do not require financial transfers to strangers.
7) Never trust screenshots or profit dashboards
Crypto scammers often show screenshots of trading accounts that appear to generate large profits. These images are easy to fake or are displayed on fraudulent websites controlled by the scammer. Even if a platform shows profits, it does not mean the money exists. If you cannot withdraw funds easily through a verified exchange, the investment may be fake.
8) Watch for requests to move conversations off the platform
Many scams begin on social media, dating apps or messaging platforms. After the first contact, scammers often ask victims to continue the conversation on WhatsApp, Telegram or another private messaging app. Moving the conversation helps them avoid detection by the original platform. If someone quickly asks you to switch apps, treat it as a warning sign.
9) Talk to someone you trust before sending money
Scammers often isolate their victims and discourage them from discussing the situation with friends or family. Before sending cryptocurrency or making a large investment, pause and talk to someone you trust. A second opinion can often spot warning signs that are easy to miss when emotions are involved.
What to do if you already sent cryptocurrency to a scammer
If you believe you sent cryptocurrency to a scammer, act quickly. Contact the exchange or platform you used to send the funds and report the transaction immediately. Some exchanges may be able to flag the receiving wallet and help investigators track suspicious activity.
You should also report the scam to the FTC at reportfraud.ftc.gov and notify your local law enforcement agency. If the scam began on a social media site, dating app or messaging platform, report the account there as well so it can be investigated and removed.
While recovering funds can be difficult, reporting the incident can help authorities identify larger fraud networks and potentially prevent others from becoming victims.
Kurt’s key takeaways
Cryptocurrency scams continue to grow because the scripts are polished and carefully tested. The criminals behind them understand human psychology. They know when to apply pressure, when to build trust and when to promise rewards. Recognizing these patterns is one of the most powerful ways to stop them. When you know the script, the scam becomes much easier to spot.
Have you ever received a message that tried to convince you to send cryptocurrency, and did the script almost sound believable? Let us know by writing to us at Cyberguy.com.
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- For simple, real-world ways to spot scams early and stay protected, visit CyberGuy.com – trusted by millions who watch CyberGuy on TV daily.
- Plus, you’ll get instant access to my Ultimate Scam Survival Guide free when you join.
Copyright 2026 CyberGuy.com. All rights reserved.
As if there weren’t already enough devices listening in on everything being said in your home, Prego, the pasta and pizza sauce brand, is releasing a device designed to record everything said around the dinner table for posterity. The Connection Keeper, which looks like an oversized pasta jar lid, was created in collaboration with StoryCorps, the nonprofit organization focused on preserving the stories of Americans in a collection housed at the Library of Congress’ American Folklife Center. There’s no AI, Wi-Fi, or Bluetooth, but you can optionally upload recordings to StoryCorps’ website to make them easier to share with family.
Prego says the goal of the device is to encourage families to make memories through conversation during dinner instead of staring at their phones — but only for a small number of families. The company is only planning to make less than 100 of them. The Connection Keeper will be available for purchase online starting on April 27th for $20 as part of a bundle that includes the device, a jar of Prego sauce, spaghetti noodles, and a deck of cards featuring conversation prompts and ideas.
Using the device is as easy as plopping the Connection Keeper down in the middle of everyone at the table and pressing one button to start recording. Using a pair of microphones, it captures CD-quality audio to a 16GB microSD card for up to eight hours when fully charged.
When dinner’s over, the recordings can be transferred to a computer over USB-C and then uploaded to a dedicated microsite created by StoryCorps where they’re preserved and accessible only by the uploader, unless they choose to share them with other StoryCorps users or the general public. You even have the option to archive them within the Library of Congress, which makes them public automatically, so hopefully your family talks about more than just stealing brainrots.
The recordings can be accessed on a smartphone through the StoryCorps app, but Prego intentionally left phones out of the rest of the process to discourage their use at the table. It’s also why the Connection Keeper lacks a screen. The goal was to minimize interactions with the device so family members instead focused on talking with each other.
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