Do you know how the Internal Revenue Service (IRS) contacts taxpayers to resolve a problem? The first step is almost always to send the taxpayer a letter through the U.S. Postal Service.
It is very rare for the IRS to make their first contact attempt through a call or a personal visit. This happens in two circumstances: when taxes are notably delinquent or overdue or when the agency feels an audit or criminal investigation is necessary. Furthermore, the IRS does not send initial requests for taxpayer information via email or social media.
Now that you know all this, you should also know about some of the phone scams being perpetrated by criminals claiming to represent the IRS (or representatives of investment firms).
Should anyone call and try to trap you with one of these deceptive acts, hang up. Next, report the caller ID and/or callback number to the IRS at firstname.lastname@example.org with the subject line “IRS Phone Scam.” You can also notify the Department of the Treasury (treasury.gov) and the Federal Trade Commission (ftccomplaintassistant.gov); list “IRS Telephone Scam” in the message.[i]
The information in this material is not intended as tax or legal advice. Please contact your tax or legal professional should you suspect any dishonest scheme or attempted fraud.
Scam #1: “You owe back taxes. Pay them immediately, or you will be arrested.” Here, someone calls you posing as an IRS agent, claiming that you owe thousands of dollars in federal taxes. If the caller does not reach you in person, a voicemail message conveying the same threat, urges you to call back quickly.
Can this terrible (fake) problem be solved? Yes, according to the unscrupulous caller. Perhaps with the help of your Social Security number, they suggest. Or maybe with some specific information about your checking account? Maybe even your online banking password? They may tell you that this will all go away if you wire the money to an account or buy a prepaid debit card. These are all efforts to steal your money.
The demand for immediate payment gives it away. The IRS does not call up taxpayers and threaten them with arrest if they cannot pay back taxes by midnight. The preferred method of notification is to send a bill, containing instructions to pay the amount owed to the U.S. Treasury (never some third party).
Sometimes, the phone number on your caller I.D. may appear to be legitimate because more-sophisticated crooks have found ways to manipulate caller I.D. systems. Asking for a callback number is not enough. The crook may readily supply you with a number to call, and when you dial it, someone may pick up immediately and claim to be a representative of the IRS, but it’s likely a co-conspirator – someone else assisting in the scam. For reference, the IRS tax help line for individuals is 1-800-829-1040.
Scam #2: “I made a terrible mistake; you must help me.” In this scam, a caller politely informs you that the U.S. government is issuing supplemental Social Security payments to seniors next year. Do you have a bank account? You could enroll in this program by providing your account information and your Social Security number.
The caller may then tell you that they’ve made a huge mistake while inputting your account information – and your account was accidentally credited with a full payment, even though you were not enrolled. The distraught caller may now attempt to convince you that they will lose their job unless you send over an amount equal to the lump sum they claim was mistakenly deposited. If you refuse, the caller may have a conversation with a “boss” who demands that money be withdrawn from your account.
Scam #3: “The IRS accidentally gave you a refund.” In this sophisticated double-cross, thieves steal your data, then file a phony federal tax return with your information and deposit a false refund in your bank account. Then, they attempt to convince you to pay them the money, claiming they are debt collectors working for the IRS or IRS agents.
If you really do receive an erroneous federal (or state) tax refund, you should notify your legal or tax professional about it as soon as you can and arrange its return. You may also need to close the involved bank account if you sense you have been victimized.1
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