As the summer winds down and back-to-school season kicks into full swing, the new target for scammers is students and their parents. A caller demands that you immediately pay an unpaid tax bill. When you ask questions or refuse, the caller turns hostile and threatens that the police are on their way to arrest you.
We warned about a variant of this scheme back in a June post where the caller claimed a federal student tax was owed. The recent warning from the IRS mentioned these calls tend to ebb and flow as scammers wait for the "prime opportunities to strike."
The Treasury Inspector General for Tax Administration stated in January 2016 that nearly 900,000 reported tax scams had tricked individuals out of more than $25 million. Those numbers are likely out-of-date as these schemes become more sophisticated and take target more people.
Know the red flags and when to hang up
Here are some basic tips that are becoming a common theme on out blog:
- Any unexpected phone call from the IRS should put you on guard. The IRS still initiates all contact with a letter or multiple letters if you fail to respond. Even if the caller ID on your phone lists the IRS or Department of Taxation, it's a scam.
- Tax refunds each year. If taxes are withheld from your wages and you receive a refund each year, you should probably hang up on the caller and contact the IRS directly. The Service can verify your taxes have been paid. It is also good to report new variants, so they can be added to warnings.
You can also call your attorney if you're involved with a pending tax audit.
- Demands for immediate payment or threats of deportation/criminal charges. The IRS does not demand immediate payment over the phone. It may place a lien against your property and try to levy assets in your bank account, but it does not send out local law enforcement officers to take you into custody for failing to pay your tax bill.
- Unusual payment methods. The IRS does not ask for or accept credit card numbers over the phone, and they cannot accept prepaid debit cards or gift cards as payment for a tax obligation. If the caller wants to stay on the phone to monitor while you go to the store to buy a debit or gift card, consider it a double red flag.
Spread the word. The best way to avoid and stop these schemes altogether is education. Make sure that elderly relatives, vulnerable adults and college students know what to watch for so that they don't fall for these requests and give out personal information or hand over money when a scammer calls. If you or a family member receives one of these calls, report it online.