Tax fraud

You may have easily missed a major piece of news that broke last week amid the media-feeding frenzy generated by the release of Donald Trump’s “Access Hollywood” tapes and Hillary Clinton’s Wikileaked Wall Street speeches.

Authorities in India busted nine — yes, nine — bogus IRS call centers, arresting 70 people on suspicion of tricking (and often scaring) Americans into sending money to settle “pressing” but nonexistent tax bills.

The victory certainly wasn’t as historic — or dare I say, “yuge” — as the one Trump or Clinton will achieve in November, but it is certainly significant, given how pervasive and unyielding the IRS phone scam has become in recent years.

How It Works

You receive a call from a purported IRS agent claiming you owe money and must pay immediately. If you can’t or don’t come up with the money pronto, well, you can expect a police officer or U.S. Marshal at your door, who will arrest you and throw you in jail. In a 21st-century version of this scheme, you receive a robocall in which an automated voice directs you to call a specific number in order to settle your debts with Uncle Sam. If you don’t call back right away, you could be anything from sued to arrested to deported, or maybe you’ll just have your driver’s license revoked.

It’s an inelegant ruse, of course. The prize? Your hard-earned cash, and for good measure some of your personally identifiable information, or PII.

I probably don’t have explain this hot and heavy approach, because by now you’ve been on the receiving end of one of these phone calls. IRS scams are so prevalent they topped the Better Business Bureau’s top scams of 2015 by a mile — and that was well before the IRS itself issued a warning to taxpayers saying there has been a “summer surge” this year in IRS impersonation scams, with a new variant asking poor, unsuspecting taxpayers to fork over payment on iTunes gift cards.

A Sigh of Relief?

If you think this recent bust means you can breathe a little easier every time your phone rings, unfortunately, you’re wrong.

Make no mistake, those nine phony call centers represent only a small fraction of all the nefarious enterprises out there. Consider the latest stats from the U.S. Treasury Inspector General for Tax Administration published in The Wall Street Journal: 8,000 victims have paid more than $47 million due to these completely phony “IRS agents.”

Scams are akin to the old whack-a-mole game, or to put an even finer point on it, a Lernaean hydra — cut one of them down, and two more will spring forth. In fact, around the same time that police were raiding the bogus call centers, reports had surfaced that there was a new IRS scam in town: Fraudsters have started to send out notices about fake IRS tax bills related to the Affordable Care Act via email and traditional snail mail in an effort to up their meet their, ahem, sales goals.

What You Can Do

Stay vigilant because, truth be told, it’s about to get significantly more difficult to avoid getting got. The IRS announced just last month that it’s going to begin using private collection firms to handle overdue federal tax debt, a change that could effectively throw the one-step method of avoiding phony IRS agents — hang up the phone! — out the window.

The IRS has yet to make it completely clear (can you even remember the last time the IRS made anything completely clear?) whether it’s going to allow the collection firms it’s hired to call debtors directly. (We can only hope against hope that it doesn’t.) But even with this significant change, there will be a few dead giveaways that there’s a scammer on the other end of the line.

  1. If you do owe Uncle Sam, you’ll have received a bill in the mail, and should you be one of the more unfortunate ones turned over to a legitimate collector, you’ll also get written notice that your debt has been transferred over to one of its collection firms: CBE Group, Conserve, Performant and Pioneer.
  2. You’ll be allowed to make your payments online at Your Tax Bill, so if you’re not being told about this option, hang up, then notify the IRS.
  3. Payments by check should be made to the “U.S. Treasury.” If you’re being asked to write one made payable to the collector or even the IRS (which can easily be altered to read “MRS.”), hang up the phone.
  4. There will never be any threat involving police or marshals or prison.

Other Ways to Protect Yourself

Here is the toll-free number for the IRS: 800-829-1040. If you get even the slightest inkling that someone is trying to swindle you, hang up and immediately call the agency directly. Do not pass go. Do not give away hundreds of dollars — or, more importantly, even one morsel of your PII.

If you get an email that looks like it is coming from the IRS about a tax bill, DO NOT click on any links (that could be malware designed to infect and infiltrate your computer system and steal any payment or personal information it can get its hands on). Instead, forward the email to and wait patiently for someone to contact you about its validity.

What to Do If You’re a Victim

If you think you’ve already been had, well, then you’ve got some work to do. Report the crime to your local police, file a complaint with the Federal Trade Commission and call the IRS at the number provided above to find out if you really owe them money. Contact TIGTA to report the call either at 800-366-4484 or by using its IRS Impersonation Scam Reporting website. And then rely heavily on the three Ms I outline in my book, Swiped: How to Protect Yourself in a World Full of Scammers, Phishers and Identity Thieves:

  1. Minimize your exposure to fraud: If you did turn over your most sensitive personal information, request that a fraud alert be put on your credit file by all three credit bureaus — Equifax, Experian and TransUnion. You need only contact one and they will electronically notify the other two. You might also consider a credit freeze, a more comprehensive (but also a bit more cumbersome, as you need to notify each credit bureau individually) lockdown of your credit report that prevents thieves from opening new accounts in your name.
  2. Monitor your accounts. You might wish to purchase a combination credit and fraud monitoring service, which provides instant alerts if someone tries to open up lines of credit. You may also consider enrolling in transactional monitoring programs offered for free by banks, credit unions and credit card companies that notify you of any activity in your accounts. At the very least, keep an eye on your credit yourself. You can do this by pulling your credit reports for free each year at and viewing two of your credit scores for free, updated every two weeks, on
  3. Manage the damage. Close any account that has been tampered with or opened by a fraudster without your permission. And if you gave them the veritable skeleton key to your finances — your Social Security number — be sure to notify the IRS, do all of the above and file your taxes as early as possible next year to preclude anyone from getting their grubby little fingers on your refund.

Remember, it’s not just the phony tax man you have to worry about whenever you pick up the phone. Fraudsters come in all shapes and sizes, and no matter how many scam centers authorities put out of business, the ultimate guardian of the consumer is the consumer (i.e., you)! Stay vigilant. While identity theft may be the third certainty in life, with a little luck, you can make it that much harder for fraudsters to get you in their maw.