Remain Alert for Tax Scams That Target Victims All Year, Not Just During Tax Filing Season
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Remain Alert for Tax Scams That Target Victims All Year, Not Just During Tax Filing Season

Income Tax scams occur all year long, not just during the January through April tax season, and can catch unsuspecting victims off guard

April 6, 2020

Most people think that they don't have to watch out for scammers once they submit their income tax returns to the government. But scammers never take a vacation and work overtime to cheat you, taking hundreds or even thousands of dollars. So whether it's April or the middle of summer, stay alert for income tax scammers trying to trick you into handing over money or sensitive personal information.

EFTPS Scam

One scam revolves around the Electronic Federal Tax Payment System (EFTPS). Scammers call unsuspecting victims to demand a tax payment, often spoofing the telephone number on the caller ID so it appears that the Internal Revenue Service (IRS) is calling. The scammers claim that certified letters were mailed to the victim demanding payment for a tax bill, but that they were returned as undeliverable. If the victim does not make an immediate payment, the scammer threatens arrest. But the catch is that payment is required using a certain type of prepaid debit card, which the scammer claims is linked to EFTPS, or sometimes a gift card. Victims are often warned not to talk to a tax preparer, attorney, or the local IRS office until after the payment is made for a variety of reasons or they will face some other consequence.

Robocall Messages

The IRS does not call with prerecorded messages asking for a call back. With this tactic, scammers tell victims that if they do not call back, a warrant will be issued for their arrest. Those who do respond are told they must make immediate payment either by a specific prepaid debit card or by wire transfer in order to settle a tax bill.

Private Debt Collection Scams

The IRS sends letters to a relatively small group of taxpayers each year whose overdue federal tax accounts are being assigned to one of four private-sector collection agencies. Taxpayers should be on the lookout for scammers posing as private collection firms. The IRS-authorized firms will only be calling about a tax debt the taxpayer has had for years. The IRS would have previously contacted taxpayers about their tax debts many times previously.

Scams Targeting People with Limited English Proficiency

Taxpayers with limited English proficiency are frequently targets of phone scams and email phishing schemes. Con artists often approach victims in their native language, threaten them with deportation, police arrest and license revocation. They tell their victims that they owe the IRS for a debt and must pay it promptly through a preloaded debit card, gift card or wire transfer. They may also leave "urgent" callback requests through robocalls or via a phishing email. Unfortunately, the victims of this scam very often don't seek help due to fear.

Signs of a Tax scam

  • The IRS and its authorized private collection agencies will never call to demand immediate payment using a specific payment method, such as a prepaid debit card, gift card, or wire transfer. The IRS does not even use these methods for tax payments. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. All tax payments should only be made payable to the U.S. Treasury and checks should never be made payable to third parties.
  • If anyone is making threats to immediately bring in local police or other law-enforcement agencies to have the taxpayer arrested for not paying, hang up. Law enforcement does not arrest taxpayers who don't pay up. They have bigger things to worry about.
  • You should always have the opportunity to question or appeal and tax debt owed. If there is no opportunity to do so, you're dealing with a con artist.
  • You should never be asked for payment information by phone or email.

Special Circumstances

The IRS initiates nearly all communication with taxpayers through mail delivered by the United States Postal Service. But there are some unique and special circumstances in which the IRS will call or come to a home or business. But whatever the case for the special circumstance, the IRS will send notices by mail first. These circumstances include:

  • when a taxpayer has a a very large overdue tax bill, often more than $100,000;
  • to secure a delinquent tax return or a delinquent employment tax payment; or
  • to tour a business as part of an audit or during criminal investigations