It's tax season again, which means scammers are taking the opportunity to rake in huge money by targeting victims. With the number of cases increasing, it's no wonder the IRS names phone scams as the top ranking item on its 2015 "Dirty Dozen" list.
A scammer typically gives a fake "badge number" when making a phone call. Usually, the call is filled with threats to instill fear in the victim, eventually making the individual succumb to whatever instructions the caller gives. These threats typically include that the victim will be arrested if they don't make an immediate payment as well as that their driver's or business license would be revoked.
"First off, consumers should know that anyone that starts threatening you over the phone, it's an absolute scam. You should just hang up the phone," said Greg Dunn, CEO of Hawaii Better Business Bureau.
On a national level, scammers managed to collect over $15.6 million from over 3,000 people beginning in 2013. The average amount lost is $5,000 for every victim.
A typical phone call from a scammer usually includes following words: "This call is officially a final notice from IRS, Internal Revenue Services (sic). The reason of this call is to inform you that IRS is filing lawsuit against you."
According to the agency, their employees would never initiate contact with a taxpayer by calling him, sending an email or even sending a text message. Part of the IRS' SOP is to send the bill to the taxpayer through the mail. They never inform a person about due taxes through a phone conversation. Moreover, the agency never requires the taxpayer to pay his taxes using a specific payment method, nor would they ask for credit or debit card information over the phone. Lastly, unpaid taxes never result in the revocation of one's driver's or business license.
"The scammers know this. They understand the psychology behind it and so they prey on your fear during tax season that oh, someone's calling me because it's tax season so I can talk to them," adds Dunn.
Originally, scammers preyed on the elderly and newly-arrived immigrants. However, they now target a broad range of taxpayers.
Timothy Camus, an official with the Treasury Inspector General for Tax Administration (Tigta), and Eric Smith, a spokesman for the IRS, said that the best way for a taxpayer to respond to such a phone call is by simply hanging up, which should be repeated if the scammer calls again.
The next thing to do is to report the incident to Tigta by calling them at 1-800-366-4484 or by visiting their website at www.tigta.gov. People are also advised to contact the Federal Trade Commission through the agency's FTC Complaint Assistant found at FTC.gov, where they should add the words "IRS Telephone Scam" to the complaint comments section.
Photo: Tax Credits I Flickr