The caller ID may say IRS, but you shouldn’t assume it’s a government agent you’re speaking with on the phone. It could be a fraudster hoping to intimidate you into providing sensitive information or making a payment on a tax bill that doesn’t exist. Common IRS scams include demanding Social Security numbers or insisting on gift card payments. Failure to comply could result in threats that law enforcement is on its way.
“The (tax) system is very complicated, and most people aren’t confident when filing their taxes,” says Christina Taylor, head of operations at Credit Karma Tax. That can make it easy for criminals impersonating IRS agents to manipulate others into giving up personal or financial information. “The scammers prey on that vulnerability,” according to Taylor.
To assure you don’t become a victim, watch out for these five red flags of an IRS tax scam.
— An email, phone call or text claiming to be the IRS.
— Poor grammar, hostile tone or awkward sentence structure.
— Threats that law enforcement will be called.
— Requests for payment via gift card, prepaid card or wire transfers.
— Demands for a refund to be repaid.
Email, Phone Call or Text Claiming to Be the IRS
When it comes to contacting taxpayers, the IRS will almost always use the U.S. Postal Service. “The IRS is old-fashioned,” says Howard Dvorkin, CPA and chairman of financial solutions website Debt.com. “You’ll get a letter first.”
Since the IRS doesn’t initiate contact over the phone, the best course of action may be to simply hang up on anyone who claims to be an IRS agent. Don’t believe what your caller ID says either. Scammers have gotten proficient at spoofing, a method by which they can make it appear on caller ID that a call is coming from the IRS or Washington, D.C.
You can also ignore all texts that supposedly come from the IRS. “The IRS doesn’t even have the capability to text you,” Taylor explains.
Avoid engaging with anyone who calls or emails and claims to be from the IRS. They may have already accessed some of your personal information through a security breach and the longer you stay on the phone with them, the greater the chances are they may be able to cajole or bully you into sharing more.
“In some cases, they have enough of your information to scare you into giving the rest of your information,” says Adam Levin, founder and chairman of CyberScout, a data and identity protection company.
Poor Grammar, Hostile Tone or Awkward Sentence Structure
If you do find yourself on the phone or reading an email from someone who claims to be an IRS agent, poor English is another giveaway of a scam. Some IRS scams are based outside the country, and poor grammar, multiple typos or unusual wording is a red flag that the message or email is not an official IRS communication.
“The tone of the communication is very important,” Levin says. “The IRS doesn’t call and threaten.” Hostile email messages or someone yelling on the phone are sure signs of a scam.
If you need reassurance that the call or email is fake, you can contact the IRS directly to confirm the message is not from the agency. Be sure to call the agency’s toll-free number of 1-800-829-1040 instead of any number left on your voicemail or sent in an email.
Threats That Law Enforcement Will Be Called
Scammers use the IRS’ intimidating reputation to their benefit. “What better way to scare people than to pretend you’re from the IRS?” Dvorkin asks.
Because of that fear, people may believe an IRS impersonator when he or she says the police or immigration officers will be sent to make an arrest if payment isn’t made over the phone.
However, security experts and the IRS say this is a classic sign of a scam. “They are never going to demand immediate payment,” Levin says. If you have an outstanding tax bill, that would be a civil matter, not a criminal one, and not something the police would be called in to handle.
Requests for a Payment via Gift Card, Prepaid Card or Wire Transfer
Another sure sign of a scam is a request to purchase prepaid cards or gift cards and use those to make a tax payment. The same goes for demands to send a wire transfer.
In some cases, people will get collection calls from the IRS if the agency’s numerous mail notices go unheeded. However, the agency doesn’t demand immediate payment during those calls.
It also can’t dictate how you pay the bill. Even if it could, it would make no sense for the government to want to be paid with gift cards to the iTunes store or another retailer.
[Read: How to Survive an IRS Tax Audit.]
Demands for a Refund to Be Repaid
A less common IRS scam involves taxpayers receiving an unexpected direct deposit from the Treasury Department. Then, someone pretending to be an IRS agent contacts the person to arrange for the overpayment to be sent to them.
“The IRS is not going to call you to get a refund,” Taylor says. She reminds people, “The IRS loves letters.”
If the deposit is followed by a contact from a supposed IRS agent requesting bank information or the return of the money, taxpayers can be assured they are the target of a scam. Should you get a refund you’re not expecting, contact the IRS right away. It could be a sign that a fraudulent tax return has been filed in your name. You can also contact your financial institution to have the deposit returned to the government.
While experts say the best advice is to simply ignore IRS scams, you can also report them. The Treasury Inspector General for Tax Administration has an IRS Impersonation Scam Reporting form for that purpose. If you’ve lost money to a scammer, you may also want to file a report with your local police agency.
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Update 09/08/20: This story was published at an earlier date and has been updated with new information.