The IRS normally initiates contact via regular mail
The IRS doesn’t demand immediate payment with no opportunity for appeal
The IRS doesn’t threaten to bring in law enforcement authorities
About a year ago, Alex Reffett got a call from someone saying he owed thousands of dollars in taxes. The person gave him a bank account where he could wire the money, and Reffett said would go to the bank to complete the transfer. But when he began showing some skepticism, the caller threatened to send the police.
As a financial professional, Reffett knew the call was an IRS phone scam, and he decided to play along to see how far it would go. He might learn useful information for his clients. But for regular folks, he recommended hanging up on suspicious callers immediately.
“It can be pretty hostile and confusing if you’re not aware that it’s a scam,” said Reffett, principal and cofounder of East Paces Group and a registered investment advisor. “I have empathy for the people affected—scammers can be aggressive.”
Criminals who use mail, telephone, or email to collect bogus tax money have scammed thousands of people out of millions of dollars, as well as sensitive personal information, according to the IRS. Here are a few tips from Reffett and other financial professionals to help you avoid becoming the victim of a fake IRS scam.
What the Real IRS Won’t Do
Alano Massi, managing director of financial planning company Palm Capital Management, suggested the best way to avoid scams is to know what the IRS will not do.
According to the IRS website, government tax collectors won’t:
- Initiate contact with taxpayers by email, text messages, or social media requesting personal or financial information.Call demanding immediate payment via a specific method such as a prepaid debit card, gift card, or wire transfer.Demand immediate payment without giving you the opportunity to question or appeal the amount.Threaten to bring in law enforcement authorities, including immigration officers or local police, to have you arrested if you don’t pay.
What the IRS Might Do
All this isn’t to say that the IRS will never contact you by phone or mail. But the way things are handled can tip you off as to whether the contact is legit.
For people who owe taxes, the IRS will generally mail a bill first. And the IRS instructs taxpayers to make payments to the United States Treasury. If you do get a letter purporting to be from the IRS, confirm its authenticity by calling the local IRS office, said John Iammarino, principal and founder of retirement planning company Securus Financial.
Even in special circumstances, such as with overdue tax bills, delinquent tax returns, or employment tax payments, the IRS will generally send notices in the mail before calling or coming to a home or business, according to the government.
Still, it’s possible the IRS could call or show up unannounced to collect a tax debt. If someone visits you saying they’re from the IRS, know that legitimate representatives will provide two forms of credentials. If you want to check their IDs, the representatives will provide you with a dedicated IRS line to call to verify their information.
There are circumstances when the IRS might assign a case to a private collections agency, but only after providing the taxpayer with written notice. Like the IRS, private debt collectors won’t ask for payment on prepaid debit cards or gift cards. Any checks would be made out to the Treasury, not the collections agency.
If you’re getting audited, the IRS might call you to set up an appointment or discuss your case, but they won’t do that before attempting to notify you by mail.
If you’re under criminal investigation, the IRS could show up at your door without letting you know. But these criminal investigators are federal law enforcement agents—they won’t ask you for any sort of payment.
Is This Call a Scam? How to Know and What to Do
Kelly Bavaresco, supervision principal and senior investor oversight at TD Ameritrade, offered up a few ideas on how to stay safe:
- Don’t trust caller ID. Numbers can be spoofed; it’s okay to hang up if you think you’re being contacted by a scammer. Unsure? Stop. Don’t feel pressured to act. Do nothing until you’re satisfied that you’re not being approached by a scammer. Involve a family member for assistance. If you’re approached by a scammer via your phone number or email, that means the scammers know how to contact you. You’ll likely be approached again and again. Let your family and friends know what’s happening so they can help. Use family and friends as a sounding board if you’re unsure about the legitimacy of a phone call or email. Report IRS phishing and online scams to the IRS. Forward emails to email@example.com or go to the phishing report page on the IRS website. Place a fraud alert. If you think a scammer has gotten hold of your Social Security Number or other sensitive information, consider placing a free fraud alert with one of the three credit bureaus (TransUnion, Equifax, or Experian). Visit identitytheft.gov for more information on credit monitoring. Try to recover lost funds. If you’ve already given money to a scammer, report it to your financial institution or the company issuing a prepaid/gift card as soon as you can. You may be able to recover some or all of the funds. Continue to be vigilant. Don’t trust unsolicited calls offering to help you recover lost money; it may be an extension of the scam. Get assistance protecting others. If you believe a loved one has fallen victim to an IRS scam, your state’s Adult Protective Services may have resources available to assist.
Some Scammer Tactics to Watch Out For
Scammers have become sophisticated. They can alter caller ID numbers to make it look like the IRS is calling. They may even use actual IRS employee titles and bogus badge numbers to make it look like they’re legitimate.
“Scammers also change tactics, often using aggressive bully tactics over the phone to scare an individual not just into paying, but into paying immediately,” Massi said.
One tactic scammers use involves filtering to improve the chance of snaring a victim. They’ll use robocalls that start with an “urgent” message about taxes you owe immediately. The message concludes by asking you to press a number. Doing so connects you to an in-person, live scammer. “Do not press any number when you receive these types of calls,” Massi cautioned.
Scammers aren’t always after your cash. Reffett has seen criminals impersonating the IRS to try to get people’s Social Security Numbers, saying they’re necessary in order to process a refund.
“It’s important to stay vigilant and skeptical,” Massi said. “If you receive a call from a number you do not know, let it go to voicemail.”