I hear from people every week who think their tax problem is the end of the world. It usually isn't. I'm Darrin Mish. I've resolved over $100 million in tax debt for clients. Here's what you should know.
What is the most common type of tax scam? It’s a phone scam where the caller pretends to be someone from the IRS and uses very threatening language demanding you pay up an amount you owe to the IRS. According to the Attorney General’s Office, phone scams are one of the fastest growing and most widespread types of fraud in recent years, surpassing the common credit repair or “This is Rachel from Cardholder Services” type scam for the first time. Click here to read or watch more IRS Help resources.
To-date this year, the Attorney General’s office has already received more than 500 complaints related to IRS phone scams whereas the figure last year topped 1,100. The most common modus operandi was where the caller purportedly from the IRS demands payment for some past-due tax liability adding that a warrant for the victim’s arrest has been issued. Demands for “tax settlements” of more than $3,000 or $4,000 is not uncommon. The calls may either come from a live caller or voice message.
“The reason this scam is so successful and pervasive is that people fear the IRS and may be willing to take rash actions to avoid trouble,” said Greg Zoeller, Indiana Attorney General. “Unfortunately, once you pay these criminals, that money is likely lost forever. Do not make any type of payment or give out any personal information to a caller unless you have verified the caller yourself and initiated the call. Gone are the days when we can pick up the phone and trust the person on the other end.”
At risk of sounding like a broken record, I’ll say this again – Do NOT fall for such scams. You must remember that the IRS never calls you over the phone uninitiated. I deal with the IRS constantly so I know how busy their personnel are. Let me confirm to you that they have no time to make such phone calls. If they have some issue with your taxes, the IRS will initiate communication through the mail. Only after you have received such a letter, you may receive a follow up phone call referring to the letter.
Even if you do receive a follow-up phone call over a matter brought up in an IRS letter to you, the IRS still has no right to demand your credit or debit card details over the phone (this includes prepaid cards). So if you receive a dubious phone call without a letter from the IRS asking for your financial details and demanding payment, just hang up.
Here are some practical tips to avoid becoming a victim of a tax scam over the phone:
- Do not allow a caller to pressure you into any immediate action, especially if it involves paying money.
- Do not give your Social Security number, banking details, credit or debit card numbers over the phone.
- Hang up on recorded message calls. Do not press any number in the process.