Here’s the scenario. Your phone rings, and the caller states, “I work for the criminal division of the IRS. You owe $15,000 in back taxes, and if this issue is not resolved right now during this phone call, in two hours there will be a sheriff at your doorstep.” What’s more convincing is that the caller ID says Internal Revenue Service.
What should you do? Most likely, you should hang up immediately.
The Most Pervasive Impersonation Scam in the History of the IRS
A sophisticated IRS impersonation scam has hit some U.S. taxpayers hard in recent years. The callers claim to work for the IRS or another law enforcement agency, even giving out fake IRS badge numbers. Victims are told they owe taxes that must be paid immediately under the threat of arrest, suspension of a business or driver’s license, or deportation. In many cases, the scammer is hostile and insulting.
The Treasury Inspector General for Tax Administration (TIGTA) has called the IRS impersonation scam “the largest, most pervasive impersonation scam in the history of the IRS.” More than 2.4 million people in the U.S. have been targeted by IRS impersonators, and more than 14,700 Americans have fallen victim to the scam, losing a total of $72.8M.
Many of the scammers go after vulnerable targets, including elderly people and immigrants. An older woman in San Diego paid $12,300 to IRS impersonators who threatened her with arrest for tax violations, and a Chicago man paid more than $5,000 to scammers who threatened him with arrest and deportation.
But those who would appear less vulnerable are targeted—and fall for—the scam as well. A 43-year-old Michigan woman who is a working professional paid IRS impersonators $1,000 after they threatened to arrest her.
Fraudulent Emails, Text Messages, and Websites
The IRS has also warned taxpayers about the fraudulent use of the IRS name or logo in emails used by scammers who try to extract information from their victims in order to steal their identity and financial assets.
The bogus emails are cleverly designed to look like official communications from the IRS or other organizations in the tax industry, such as tax software companies. These emails claim the IRS needs information from the taxpayer regarding their refund, filing status, or additional details.
The IRS provided an example of an actual phishing email used by scammers. The email includes what looks like an official IRS seal and states that the recipient is eligible for a refund if they simply fill out a “tax refund request” via a link provided.
Another variation on the scam contains instructions to “update your IRS e-file immediately.” Scams may also be sent via text messages.
If the recipient clicks on the link, the website may ask for information the criminal plans to use to file false tax returns, or the links may contain malware, which can infect the victim’s computer and allow criminals to access files or track keystrokes to gather personal or financial information.
Learn How the IRS Typically Does and Does Not Contact Taxpayers
If you or a loved one are contacted by someone claiming to work for the IRS, perhaps the most important thing to remember is that the IRS typically initiates communication with taxpayers through regular mail delivered by the United States Postal Service.
According to the IRS, its agency will not:
- Call to demand immediate payment using a specific method, such as a prepaid debit card, gift card, or wire transfer
- Threaten to bring in local police or other law enforcement to have you arrested
- Demand payment without giving you the opportunity to question or appeal the issue
- Threaten you with a lawsuit
- Leave pre-recorded, urgent messages asking for a call back
- Send an unsolicited email to collect a pending refund or to update your account
- Request any sensitive information online
- Initiate contact by email, text message, or social media to request personal or financial information
- Ask for credit or debit card numbers over the phone
All tax payments should be paid to the U.S. Treasury—never to third parties.
When the IRS Might Call
Beginning in April 2017, the IRS started doing something they once said they would never do—call taxpayers to tell them they owe back taxes using a private debt collector contracted by the IRS. However, under the new law, both the IRS and the private debt collector will notify the taxpayer by mail before calling.
First, the IRS will notify the taxpayer in writing that their account will be transferred to a private collection agency. Then, the private company will send its own letter. Only after those written notifications will the private company begin calling the taxpayer.
What to Do If You Believe You Are a Target of IRS Impersonators
The IRS provides the following advice to taxpayers if they believe they have been contacted by an IRS scammer.
If you have no reason to think you owe taxes:
- Hang up immediately and do not provide any information to the caller.
- Report the incident to the TIGTA on their IRS Impersonation Scam Reporting
- Report the incident to the Federal Trade Commission through their FTC Complaint Assistant
- Report the caller ID or call back number to the IRS at firstname.lastname@example.org.
If you are concerned that you may owe taxes:
- Review your tax account information online on the official website of the IRS.
Call the number on the written billing notice, or contact the IRS at 800-829-1040.