ACI Blog

Tax Trends 2023: Decrease in Scams Awareness, Even as Exposure Grows

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Our annual survey of consumers’ tax filing and payment habits reveals a worrying decrease in awareness of scams, as well as higher costs to prepare taxes that are surely unwelcome, as the cost of living also rises.

It’s that time of year again, when Americans brace themselves for the grind of filing their tax returns.

Each year, as the reporting requirements and list of potential tax breaks grows – from stimulus checks , to tax credits to claim for energy saving windows – so too does the time and money it takes U.S. taxpayers to file their taxes accurately and confidently. Even more concerningly, where there’s complexity, there’s also space for uncertainty, on which fraudsters can prey.

Indeed, our annual online YouGov survey of the tax filing and paying habits of almost 1,200 U.S. adults, balanced for the census, shows more people in 2023 are looking for help and advice with filing their taxes than ever before. Some even appear more willing to cut corners, perhaps in order to limit costs at a time of high inflation.

This blog explores our findings in more detail, beginning with where and how consumers are planning to file their taxes this year and how they plan to pay, before exploring where they turn for vital information and their experiences with fraud.

It’s costing consumers more to file their taxes

Our survey records a year-on-year increase in people working with certified tax professionals to file their taxes.

30 percent reported planning to file their taxes electronically or by mail through a professional (e.g., a CPA or tax accountant) in 2023, compared to 27 percent in 2022 and 25 percent in 2021. Meanwhile, those planning to file their taxes electronically through popular software (e.g., TurboTax, HR Block, TaxSlayer) is creeping downwards from 45 percent in 2022 to 43 percent in 2023.

We see signs of increased complexity, driving consumers to seek out a higher grade of professional service and advice than self-service platforms can offer. However, while this may increase consumers’ peace of mind, it will either add to their overall expenses of filing their taxes or eat into any refund they may be due.

Paying taxes by card is on the rise

When it comes to how consumers will be paying their taxes in 2023, we could see increased use of credit and debit cards, as well as alternative payment methods.

The proportion of consumers intending to pay their taxes by credit card grew to 12 percent in 2023 compared to 10 percent in 2021. During the same period, those intending to pay by debit card increased from 15 to 17 percent.

The growth in credit cards may be attributable to consumers looking to spread the cost of paying their taxes in the face of inflation and cost of living pressures while earning reward points in the process.

Meanwhile, interest in alternative payment methods (APM) such as PayPal, Apple Pay, Google Pay or Venmo is up one percentage point overall, from 3 to 4 percent. The growth is most pronounced among Gen Z and Millennials. These demographics have posted respective increases of 50 and 40 percent in terms of likelihood to pay their taxes via APM compared to last year.

Younger consumers rely on informal sources for important tax information

For the first time, we asked consumers in this years’ survey where they would turn for information about how to pay any taxes they might owe. (Full disclosure: ACI Worldwide processes tax payments for the Internal Revenue Service.)

The most popular source is consumers’ service provider of choice, such as TurboTax and H&R Block, with 29 percent of consumers choosing this option. A further 22 percent say they would trust their tax preparer to provide this information.

However, among the younger generations, we see a significantly higher likelihood that they would turn to informal sources for this information. 30 percent of Gen Z would trust either a Google search or friends and family to provide this information, as would 21 percent of Millennials.

This speaks to an important development to monitor. There is an increased risk of mistakes, or worse, falling for a scam, when people rely on informal or unverified information about where to pay taxes. Even more concerning is the fact that, overall, more than one in ten consumers (13 percent) do not know where they can find out how to pay their taxes.

Awareness of tax scams is declining, even as experiences of fraud increase

This knowledge gap provides some valuable context for assessing the risks around tax fraud scams this time of year.

Our survey found that awareness of email and phone scams is dropping, even as more consumers are experiencing fraud and attempted fraud.

Reported awareness of email and phone scams (e.g., fraudsters pretending to be the IRS by phone or email) is down markedly, respectively dropping to 59 and 60 percent from 63 and 67 percent. At the same time, the proportion of consumers that have reported not experiencing fraud or a scam has fallen to 60 percent from 67 percent a year ago.

The demographics most likely to turn to friends and family or internet searches for advice, are also reporting major uplifts in experience of and exposure to scams. The proportion of Gen Z consumers reporting experiencing email scams has risen from 12 percent in 2022 to 30 percent in 2023. For Millennials, the increase is from 14 to 22 percent.

Elsewhere, the proportion of consumers that have experience of illegal preparers and so-called “ghost preparers” has risen from 4 percent each to 7 percent each. This potentially could indicate an increased willingness to cut corners among increasingly cost-conscious consumers, even at the expense of a higher risk of fraud or penalties for incorrect filings.

Consumers must remain on their guard

This is a tax season like no other in living memory. Consumers are being squeezed between higher inflation and its impact on the cost of living, as well as the growing complexity of filing their taxes.

Our survey indicates that, nevertheless, consumers are more willing to increase their own costs further still by engaging professionals to help them file their taxes. Others are increasing the risk of costly mistakes and even the chances of falling victim to fraud, by either looking to cut corners to reduce the cost of preparing their tax return, or by turning to unofficial channels for information on how to pay their taxes.

This is perhaps a false economy during a time when extra costs and risk are best avoided. And it plays right into the hands of scammers who can always be relied upon to exploit uncertainty, financial worries and a lack of information.

Consumers must remain on their guard as scam activity targeting tax season increases. They would be well advised to rely only on official or professional channels for guidance and information, while the owners of those channels need to ensure they stay present and visible in order to deny fraudsters the chance to step in and fill that space.

Director, Product Marketing

Steve is a seasoned marketing professional with an extensive background in driving usage and adoption of financial products and services including credit cards, mobile/online bill payment, and card-based reward programs.