IRS Impersonation Scams More Prevelant Than Ever

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TIGTA big shot, Timothy Camus, recently testified before the US Senate Finance Committee on the topic of “Tax Schemes and Scams.”  By TIGTA, I of course mean the Treasury Inspector General for Tax Administration.  And by “big shot,” I of course mean that he is the Deputy Inspector General for Investigations, and he wears a nice looking mustache, and he tells tax criminals that their day will come.

According to his testimony, IRS phone impersonation scams have quickly become one of TIGTA’s top concerns.  The agency had received only scattered reports of phone scams prior to the summer of 2013.  TIGTA started to track this crime in October 2013, and ever since then has kept statistics and concentrated efforts on eradicating this terrible, frustrating crime.

The way it works is the scammers call and threaten you with criminal penalties if you don’t pay a certain sum to address a tax problem that usually doesn’t even exist.  The victim is asked to load money onto a prepaid debit card and then call back with the card number.  These criminals used to target primarily the elderly or recent immigrants; the most vulnerable people who do not have sufficient command of the English language and/or those who do not have an understanding of the US tax system.  But Camus says that they have not been discriminating much lately.  He describes having received a call himself, at home, the weekend before his speech, and he told the guy, “your day will come.”  I have received phone scam calls too, most recently a very generic sounding recording using robo-call technology.

Here are some of the key phone scam statistics from Camus’ Senate testimony:

  • TIGTA has received over 366,000 complaints of phone scam calls (9,000 – 12,000 per week)
  • 3,052 victims paid out about $15.5 million
  • one poor fool paid over $500,000
  • 296 of these victims gave more than just money (i.e., social security number or other sensitive identifying information)

Camus says that this scam is the subject of an “ongoing multi-agency investigation.”  Let’s hope they figure out how to catch these guys because the IRS public service messages about how to avoid phone scams aren’t working as effectively as they should.

Tax Day 2014

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It’s April 15th — tax filing deadline day!  From where I sit, there are only a couple more hours left to file your federal income tax return.  Today I should be writing about (and you should be reading about) procrastination, how to file an extension, what to do if you owe taxes and can’t pay, or various IRS statistics like how many returns have been filed, how many refunds have been issued, how much the IRS has paid out in refunds, etc.  Before the age of electronic filing, we used to see the obligatory TV news story about which post offices were open late and which ones had the longest lines.  But gone are the days of such innocent tax day topics.  Today I’m mostly seeing warnings about those pervasive telephone tax scams.

For as long as I can remember, the IRS has warned taxpayers of phony IRS calls, but it seems like it used to be an annual warning that came out in the “Tax Tips” series.  And it always seemed more like a theoretical problem with some anecdotal evidence here and there.  Today, however, these phone scams have become commonplace.  It doesn’t seem to matter where you live either; I’ve seen reports of phone scams all across the country.  And I’ve handled my share of calls from local taxpayers who have been scared out of their minds by phony IRS calls.  In Sacramento, some victims are being told that they are going to be arrested for tax fraud.  These scam artists are apparently very convincing.  Sometimes people who don’t even owe (and know that they don’t owe) are tricked into believing that they are in trouble with the IRS.

The IRS is very clear about what type of contact they initiate with taxpayers, and if you become familiar with the standard IRS warnings, you’ll never be fooled by a tax scam.

The Unlikely IRS Phone Scam Victim

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Have you heard about those IRS phone scams?  No, it’s not what you’re thinking; not scams sponsored by the IRS.  They are scams perpetrated by individuals posing as IRS personnel, and they have been more prevalent than ever in the past couple years.  If you haven’t heard of them then maybe the IRS isn’t being aggressive enough with its public announcements and warnings.  If you do know about these schemes then maybe you have pondered the questions “Who are these people that pay thousands of dollars to phony IRS agents?  Can’t they tell it’s a scam?  How can someone be so gullible?”

I have definitely had these kinds of thoughts, that is until reading the story of Halah Touryalai, staff writer for Forbes.  She was recently contacted by one of these scam artists and almost fell for it.  This is an expert on finance and investing; somebody who should probably know better.  And even though she stopped short of doling out the $5,000 that they were demanding of her, they definitely had her going.  This is somebody who has always paid her taxes and never had a reason to doubt herself.  It only goes to show that if these scam artists call with enough urgency and authority in their voices, they can successfully dupe just about anybody.

Touryalai was told a whole host of lies on the phone that day:

  • The IRS had launched an investigation against her
  • She had attempted to defraud the government by not reporting all her income
  • The IRS was going to get a warrant for her arrest
  • The IRS was going to seize her property
  • The IRS had already issued a bank levy to collect the tax debt
  • The IRS had suspended her driver’s license and passport
  • Her social security number had been “blacklisted”
  • Somebody was waiting at her office to arrest her when she arrived
  • She could avoid further action if she paid $4,900 within the next hour

Be careful out there!  As long as you know how the real IRS operates, you’ll be fine.  The IRS will never demand that you make payments over the phone.  They will rarely contact taxpayers by phone without first sending notices by mail (and certainly not for a measly $4,900!).

2014 Dirty Dozen Revealed

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Every year around the beginning of tax season, the IRS comes up with its “Dirty Dozen” tax scams list.  In recent years the top three have been (1) Identity Theft; (2) Phishing; and (3) Return Preparer Fraud.  The 2014 list includes Identity Theft and Phishing in the top three again, this time along with “Pervasive Telephone Scams.”  Phone scams often take advantage of recent immigrants, the elderly, or uneducated.  It is easy to avoid a phone scam if you know what to look for and if you maintain a certain degree of skepticism when receiving an unsolicited phone call.  However, as easy as it is in theory, these phone scams must be at least somewhat successful or they wouldn’t be described as “pervasive,” and they wouldn’t have made it to the top of the Dirty Dozen this year.

Here is the Commissioner’s official generic statement:

Taxpayers should be on the lookout for tax scams using the IRS name. These schemes jump every year at tax time. 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.

The reason that the IRS releases the Dirty Dozen list in February is that they have noticed a spike in tax scams around this time of year.  However, just as the IRS can (and will) collect on delinquent tax accounts by issuing a wage garnishment or bank levy throughout the year, tax thieves and scam artists pretty much work around the clock.

"This is George Miller with the IRS…"

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It sure was nice of the IRS to warn taxpayers of a “pervasive telephone scam” last week.  The scam artists apparently target recent immigrants, threaten jail time, and run credit card payments over the phone.  The IRS described a number of things to look out for, presumably so we all can  independently determine if the call we received is from a scammer or from an actual IRS representative.  The only problem is sometimes the thieves and the IRS agents share some of the same characteristics.  Let me show you what I mean.

  • Scammers use phony names and IRS badge numbers: Great, but how would we know if the name or badge number is fake?!  The IRS says that they often use common names.  But I know there are plenty of real IRS reps who have common names.  Plus, recent immigrants may not be fully aware what is or is not a common American name.  It might have been helpful if the IRS had given a sample ID number so that taxpayers could at least know if it was the correct number of digits.  Many of the representatives I speak with use 7-digit ID numbers (assuming I have been talking with the IRS for the past 8 years and not phone scammers).
  • Scammers may be able to recite the last 4 digits of the victim’s SSN: So can a real IRS rep.
  • Scammers spoof the IRS toll-free phone number on caller ID: When I have received calls from revenue officers, offer in compromise examiners, and appeals agents, it usually shows “Unknown” on caller ID, so this is good to know.
  • Scammers sometimes follow up the call with a bogus email: Real IRS agents never send emails, so this is actually a dead giveaway.
  • Scammers produce phony call center background noise: I have often heard phones ringing and low chatter that is characteristic of a call center when talking with the IRS, so I’m not sure how helpful this tip is.

I think this IRS warning is useful, but only by becoming familiar with the entire list of characteristics.  If you receive a call fitting one of the above descriptions, there may not be cause for concern (unless you are asked to provide credit card info).  But if you receive a call with many of the above characteristics, it is probably a phony IRS call and a scam.