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Don't Get Fooled This Tax Season -- Protect Yourself From IRS Phone Scams

By Jessica McCormick - Apr 6, 2016 at 12:39PM

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For starters, the IRS won't call you to demand payment.

If you receive an aggressive or threatening phone call from a person who claims to represent the Internal Revenue Service, beware -- it could be a scam. The IRS has reiterated its warning about an ongoing phone scam where a caller pretends to be a representative of the IRS in an attempt to steal your money.

There's definitely a method to the tone and messages of these fraudsters. The caller is likely to sound official, speak aggressively, and demand immediate payment of taxes on the spot. Sometimes there are threats -- pay up now or face arrest or some other serious consequence. Callers also tend to ask for personal information such as Social Security numbers or checking account information. You may also find an "urgent" callback request on your voice mail or answering machine.

These tactics, which might also include threats of fines and other penalties, are designed to intimidate taxpayers into sending money.

"When someone says they are from a government agency like the IRS, many of us may accept the statement as true," said Gerri Walsh, FINRA's Senior Vice President for Investor Education. "Psychologists and behavioral economists have a name for the tactic these IRS impersonators use. It's called source credibility, and it's extremely powerful."

This type of scam is particularly widespread at this time of year, in the height of the tax filing season, but beware -- these scammers are at work all year round. In fact, the Treasury Inspector General for Tax Administration recently announced they have received reports of roughly 896,000 calls since October 2013, and more than 5,000 victims who have collectively lost more than $26.5 million as a result of the scam.

How do I know if the caller is a scam artist?
In addition to the red flags above, it's helpful to know how the IRS would actually handle an outstanding tax issue. Perhaps most important to note: The real IRS would not call taxpayers and demand that they wire or send money. Instead, the IRS would send a written notification of any tax due through the U.S. mail.

Also, the real IRS would not:

  • demand that you pay taxes and not allow you to question or appeal the amount that you owe;
  • require that you pay your taxes a certain way, such as with a prepaid debit card;
  • ask for credit or debit card numbers over the phone; or
  • threaten to bring in police or other agencies to arrest you for not paying.

You should also take note of who is calling you. A blocked number is a sure sign of a fraud. And just because a number shows up doesn't mean it is real -- it's likely a non-working number. Fraudsters have also been known to illegally mimic or "spoof" the display so the call appears to originate from the IRS or another government agency, or to otherwise illegally assume the name of a real employee. Make no mistake about it; these calls are scams. Be skeptical of any unsolicited callers claiming to be from the IRS, and do not return the call if the scammer leaves you a voice message.

What can I do if I receive a call like this?
First and foremost, it is important that you do not send money or give any personal information to the caller. In fact, a recent Investor Alert issued by the Financial Industry Regulatory Authority (FINRA) advises ending a conversation with any unsolicited caller as quickly as possible. This severs the emotional hold a fraudster might have on you, and gives you time to think things through.

If you are unsure whether the call you received was a scam, you can contact the IRS at (800) 366-4484. They will help you determine if the caller is an IRS employee with a legitimate need to contact you.

If you suspect you have been a target of these IRS phone scams, you should report the incident to the Treasury Inspector General for Tax Administration via the online form on its website. You should also report it to the Federal Trade Commission using the "FTC Complaint Assistant."

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This article originally appeared at The Alert Investor.

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