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Tax scams

posted Aug 25, 2015, 8:19 AM by Craig Cox
Last week I learned of two different tax scams.  In the first, the scammers contacted the victim via telephone to extort money.  They claimed the victim had filed bad information and needed to pay additional taxes (or maybe a fine).  The victim was under such a psychological hold that she actually purchased a prepaid card and read the number over the phone to the scammers, fearing arrest.  The IRS itself warns against these kinds of scams, particularly stating that they will never ask a taxpayer to buy a prepaid cash card.

NPR has published a detailed analysis of how scammers use robocalls to set up this kind of scam.  They could pretend to be the IRS, or your bank, or a credit card company.  The common thread is the unbelievable level of psychological pressure applied to the victims.  I have stated in workshops that you should always pause to think, and let your common sense kick in.  The NPR analysis includes this quote from a scammer:  'OK, if you want a moment to process this, we're going to send the law enforcement in front of your doorstep.' They know the defense is to stop and think, and they threaten punishment if the victim tries!

The best defense is to hang up the phone.  You can also report the scammer to federal investigators.  From the IRS link above:
  • Contact the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or
  • File a complaint using the FTC Complaint Assistant; choose “Other” and then “Imposter Scams.”
In the second tax scam, an individual was approached via email with a request to provide banking information; there was a statement that there was an error in the return and she should write back with her filing details, including date of birth, bank account and bank routing number.  Fortunately, she did not react to this, and didn't lose any money.  The defense here is to look at the email for red flags, and double-check with the IRS if you're not sure.  The message did not come from an account (a big red flag), so double-checking would have involved calling the local IRS office.

Brian Krebs writes that tax refund scams are being taken up by street gangs.  The article clearly lays out how gangs carry out the scam.  Be advised that he passes along some strong language, unfiltered.

Lastly, I can't stress this enough:
  • Don't put up with being bullied over the phone.  Hang up and seek help and advice!
  • If someone is trying to provoke panic, they're afraid of your common sense.  Don't be taken in!