IRS Tax Problems

FBI reports there has been a 242% increase in complaints from people who have fallen victim to an IRS Phone Scam

by
Steward Financial
on
4/23/2019
FBI reports there has been a 242% increase in complaints from people who have fallen victim to an IRS Phone Scam

Robocalls and scammers are always looking to take advantage of vulnerable consumers, but these days they’re popping up like dandelions on spring lawns. The reason? It’s tax time, and that’s prime time for scammers pretending to be the Internal Revenue Service. According to data recently published by the FBI, there has been a 242% increase in complaints from people who have fallen for one of these schemes since last year: IC3, which is the bureau’s Internet Crime Complaint Center, reports that successful fraudsters have managed to bilk $83 million from 51,146 different extortion scams.

How are they doing it? It’s a combination of speed and automation, as well as effective use of intimidation techniques. There’s also the sheer bulk in the number of conning calls being made. Steven D’Antuono of the FBI’s financial crimes section reported receiving five of the calls himself in a single day, and told CNBC, “We can’t arrest our way out of this situation because there are too many con men out there.”

If you haven’t received one of these calls, here’s the way they work: your phone rings and on the other end you hear a recording that says that you’ve been identified as owing back taxes and that you are in some type of jeopardy. They leave a phone number indicating that you are required to call back: the number is allegedly an IRS office or some other law enforcement location, but it’s just a criminal who repeats the scam and insists that you send them money. They are practiced in the art of pressure and confusion, and in far too many cases vulnerable, frightened people provide them with what they ask.

What the IRS Does and Does Not Do

According to the IRS, there are a few ways to spot a scam call. The first and most obvious is simply this: the IRS does not make phone calls. They also do not email. When a taxpayer owes money, the first contact that they receive from the agency is generally a letter sent via the U.S. Post Office, and that letter is never a demand letter: rather, it will indicate that their records indicate an owed amount and that the taxpayer (or their representative) should contact them to appeal, provide an explanation, or submit payment.  Other differences between the real IRS and scammers include:

  • Only scammers demand immediate payment via a prepaid debit card, credit card or gift card over the phone, or a wire transfer or payment via cryptocurrency
  • Only scammers threaten to involve law enforcement and arrest the taxpayer
  • Only scammers fail to offer the taxpayer the opportunity to appeal or ask questions about why they owe money
  • Only a scammer would call a taxpayer to alert them about an unexpected refund
  • Scammers will get the taxpayer on the phone, intimidate them and then hang up, then moments later they will call the taxpayer from another number and indicate that they are the police and on their way over to pick them up, or the DMV about to suspend their driver’s license

This last item is yet another way that innocent taxpayers can be tricked into providing personal information through which they can be cheated out of their money. The scammer will leave a message indicating that they’re owed money by the government and that they should call back to provide the information needed for the money to be transmitted to them. When the taxpayer calls, they are the asked for personal information such as their complete Social Security Number or credit card number. Sometimes the scammers even have the last four digits of the taxpayer’s Social Security Number in order to make themselves seem more legitimate. One way or another, once they have the information, they can proceed with credit card fraud, identity theft, and other criminal activities.

Scammers Ramping Up

Though some people assume that the calls will stop now that tax season is over, the truth is that the scammers are just warming up. Now that everybody has turned in their returns, they have the opportunity to call and say that they found mistakes. One of the most concerning aspects of these frauds is how aggressive the scammers have become. They try to force cooperation by threatening to send collectors or police to the house immediately to arrest them. They also use “spoofing” to make themselves appear more legitimate: spoofing is when a legitimate organization’s name appears on caller i.d., though the call does not actually come from that organization. Recently this tactic has involved the Taxpayer Advocate Service, or TAS, which is an actual organization that’s a branch of the IRS whose job is to protect taxpayer rights. Though most contact with TAS is initiated by taxpayers, the scammers take advantage of the fact that people are not familiar with the agency, and that it sounds very official and intimidating.

What Can You Do If A Scammer Targets You

If you receive a call from a scammer, there are specific steps that you can take:

  • The IRS has an email that is specifically dedicated to reported fraudulent calls. That email is [email protected]. Put the words IRS PHONE SCAM in the subject line.
  • Make sure that you don’t give personal information to anybody, but especially not somebody who has contacted you. The best response is to hang up immediately. Some people think it is fun or smart to keep the scammer on the phone, but this is a mistake. Once they have bee encouraged they will continue to call you. Instead, take down the number and call 800-366-4484 to call the IRS and report it. Alternatively, you can report the scam via the IRS Impersonation Scam Reporting web page.
  • Report the call to the Federal Trade Commission via the www.ftc.gov website. The FTC has a specific FTC Complaint Assistant link. Use the words IRS Telephone Scam in your comments.

Finally, if you are actually having a difficult time meeting your tax obligation, remember that there is help available to you, including from the IRS or a qualified tax professional. You can call 800-829-1040 to speak to an IRS employee who will provide you with information. Also, if you are uncertain about your tax status, go online and look at your own tax account: 24 months of payment history are available online, as well as the balance owed and the payoff amounts.

Jon Osborn, EA writes for TaxBuzz, a tax news and advice website. Reach his office at [email protected].   

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Steward Financial

Steward Financial

Jon Osborn is a tax preparer based in San Dimas, California. His company, Steward Financial Services, offers a broad range of tax preparation, accounting and business consulting for small businesses. He loves to work with clients who are looking for answers to complex tax and business planning issues. He has owned several small businesses and worked with over one hundred small business owners. He helps his individual and business tax clients find the best ways to spend their money in order to minimize IRS tax. Small businesses looking to grow, sell or just increase cash flow are one of Jon's specialties.

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