Post-pandemic economic strain and increased digitization are two reasons behind a years-long surge in tax scams, a new report from the Kaplan Group suggests. The Kaplan Group analyzed 1,384 tax scam reports submitted to the Better Business Bureau.
So far this year, tax scams have produced $5.7 million in losses. The monthly report rate has risen 62% this year, from 227 in 2024 to 368 in 2025. The average number of monthly scam reports has exploded 323% since 2020.
Even though the scams are rarely successful, when they work, they work big. Roughly one in eight involved a financial loss, but that average loss was $32,080. Texas led the way with $2.1 million scammed across 15 successful efforts (36% of all funds lost); the state accounted for 9.3% of all reports. Massachusetts saw the highest average loss at $240,000; only 1/7% of reports were filed from there. California saw the most cases with 175. Thirty saw financial losses. Overall, California accounted for 17.3% of losses.
“These imbalances indicate that scammers are concentrating on high-dollar efforts in specific states rather than spreading attacks evenly across the country,” the report states. “These figures indicate scammers are strategically focusing efforts on states with either larger refunds or lower consumer protections.”
“This study suggests that tax scam risk isn’t just about how frequently scams occur, but how significant the financial consequences are when they succeed. The data shows that while only 12.9% of reported scams led to confirmed losses, the average payout exceeded $32,000 per victim.”
The report offers several reasons behind the growth in tax scams. Inflation, a rising cost of living and reduced pandemic benefits have left more households on a financial precipice. Scammers pose as IRS agents and either demand repayment or offer false refunds.
As more people shift to digital tax filing, they are subject to new fraud entry points, thanks to the ubiquity of digital tax preparation software and online refund programs. Scammers replicate legitimate platforms and send phishing emails, hoping to rope in victims.