“If someone calls you and tells you they are an IRS agent and tries to intimidate you… just be aware that is not what the IRS does, and you need to protect yourself.”
-Chris Anderson, Soulence Tax and Accounting
Chris and Kathy Anderson are accountants on a mission – not just to help clients save on their taxes, but to protect them from tax scams and people posing as the IRS.
Sound far-fetched? It’s not. Chris and Kathy themselves received fraudulent correspondence from “the IRS” three years ago, correspondence that even used the name of a real IRS employee. They dug further and found it was a scam, but a very convincing one.
While tax filing season is limited, tax scams can happen any time of year. And as technology allows scammers to become more sophisticated, it’s not hard to understand how even smart people can be duped into giving away their hard-earned dollars or sensitive information.
“Taxpayers should be on the lookout for tax scams using the IRS name,” said IRS Commissioner John Koskinen in an IRS press release. “Scams can be sophisticated and take many different forms. We urge people to protect themselves and use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues.”
Because these scams are sophisticated and aggressive, it is important to be aware of them.
In this post, we’ll explain the top scams to watch out for, and we’ll tell you what to do if you are contacted by a suspected scammer, and we’ll give you links to further resources to help you be proactive and safe.
If the IRS calls you demanding money, hang up immediately.
Why? Because it’s NOT the IRS!
In a recent Guide to Financial Peace radio show focused on helping advisors protect their clients from IRS scammers, Kathy Anderson of Soulence Tax and Accounting explained, “The IRS will not call you and tell you that you owe them money; they will always send a letter. If you ignore the letters long enough, they may show up on your door, but they won’t call first. They ALWAYS send a letter.”
The scams started with immigrants, which included threats of deportations, but now anyone might receive a call like this. Accountant Kathy Anderson related that a relative and even her office has received illegitimate calls from “the IRS.”
Callers may say the victims owe money, with insistence that payment is made immediately over the phone, often using a pre-paid debit card (which is untraceable.) Others receive calls from scam artists claiming that they are entitled to a huge refund, hoping to pry information from them. Some calls may threaten arrest and threaten a driver’s license revocation.
Other characteristics of these calls that can make them very believable:
- Often times the callers already know personal information, such as the last four digits of your social security number.
- Callers “spoof” or imitate the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
- Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
- Victims hear background noise of other calls being conducted to mimic a call site.
- After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.
The other tax scam that has become very prevalent are email scams, known as “phishing” as in, fishing for information. Phishing is a scam typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure in potential victims and prompt them to provide valuable personal and financial information. That information is then used to commit identity theft or financial theft.
Usually the bait is a tax refund. The email states that the taxpayer is due a refund, and they simply need to find out where it should be deposited. The email looks like it’s coming from the IRS and has the IRS seal on it. If you click the link, you are taken to a site that also looks very official.
You are then directed to fill out your personal information and bank information so that the “IRS” can “deposit” your refund. Of course, the money never arrives, but the money that’s in the account vanishes.
If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to firstname.lastname@example.org.
It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.
What to DO If You Get a Phone Call, Email or Letter from the “IRS”
If you get a phone call from someone claiming to be from the IRS, here’s what you should do (besides hanging up):
- If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040. The IRS employees at that line can help you with a payment issue, if there really is such an issue.
- If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill, or the caller made some bogus threats as described above), then call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.
- If you’ve been targeted by this scam, you should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add “IRS Telephone Scam” to the comments of your complaint.
Unsure if a call might be legitimate?
- Ask for a call back number and employee badge number.
- Contact the IRS at 1.800.829.1040. to determine if the caller is an IRS employee with a legitimate need to contact you.
- If you determine the person calling you is an IRS employee with a legitimate need to contact you, call them back.
If you receive an email claiming to be from the IRS requesting personal information:
- Do not reply.
- Do not open any attachments or click any links. They may contain malicious code that will infect your computer.
- Forward the email as-is, to the IRS at email@example.com.
- After you forward the email and/or header information to the IRS, delete the original email message you received.
Note: The IRS requests taxpayers to forward the full original email to firstname.lastname@example.org. Do not forward scanned images of printed emails as that strips the email of valuable information only available in the electronic copy.
If you receive a letter or notice via paper mail:
- Contact the IRS to determine if the mail is a legitimate IRS letter.
- If it is a legitimate IRS letter, reply if needed.
- Report the incident to the Treasury Inspector General for Tax Administration if the caller or party that sent the paper letter is not legitimate.
If you receive a text message claiming to be the IRS:
- Do not reply.
- Do not open any attachments or click on any links click on any links.
- Forward the text as-is, to the IRS at 202-552-1226.
- If possible, in a separate text, forward the originating number to the IRS at 202-552-1226
- After you forward the text, please delete the original text.
STOP the Tax Scams!
Reporting such activity can help to stop it. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shutdown scams and prosecute the criminals behind them.
And remember, the best defense is a good offense! You can find credit monitoring services at VERY reasonable rates at P4P Rewards.
There are additional precautions that everyone should be taking. We’ll leave you with this video – complements of the IRS, which gives some tips to follow to keep your sensitive information safe.
Disclosure: Our content is meant for educational purposes only. While it’s our goal to help you learn about building a life of prosperity, we do not intend to provide financial advice. Please consult your financial, tax or legal advisor before making any investment or financial decisions.