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IRS Prepaid or Wire Transfer Fraud

Scam:   The IRS contacts taxpayers by phone to demand that overdue taxes be settled via prepaid debit card or wire transfers.

FALSE


Origins:   In March 2014, the IRS reported con artists impersonating their agents had stolen more than $1 million from thousands of people across the U.S. via a fraud perpetrated by telephone. The agency has called it "the largest scam of its kind" it has seen.

In it, more than 20,000 people from nearly every state were successfully defrauded by fake tax agents who told victims they owed taxes and demanded payment by prepaid debit card or wire transfer. Those masquerading as IRS agents further informed their targets that if they refused to comply with their demands for immediate payment they could be arrested, deported, or lose their business or driver's licenses.

Reports of the scam, which has been running since August 2013, continue to increase. The calls are made to look as if they originate with the IRS, with that agency's name appearing on the caller IDs of intended targets' phones. Often those conducting the fraud know the last four digits of their targets' Social Security numbers. Some of the attempts to defraud also follow up with false IRS emails and phone calls in which the con artists pretend to represent the police or motor vehicles officials.


Per the IRS's description of this fraud:
  • Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
  • Scammers may be able to recite the last four digits of a victim’s Social Security Number.
  • Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
  • Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
  • Victims hear background noise of other calls being conducted to mimic a call site.
  • After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.
As a rule, the IRS contacts those who owe on their taxes first by mail or with personal visits from field agents. Real IRS agents never insist on payment by debit card or wire transfer. They also don't ask for credit card numbers over the phone.

Says Treasury Inspector General for Tax Administration Russell George, "If someone unexpectedly calls claiming to be from the IRS and uses threatening language if you don't pay immediately, that is a sign that it really isn't the IRS calling."

The IRS advises:
If you get a phone call from someone claiming to be from the IRS, here’s what you should do:
  • If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040. The IRS employees at that line can help you with a payment issue — if there really is such an issue.
  • If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.
  • If you’ve been targeted by this scam, you should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add "IRS Telephone Scam" to the comments of your complaint.
Last updated:   26 March 2014

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Sources:

    Hicks, Josh.   "New phone scheme appears to be largest of its kind, IRS warns."
    The Washington Post.  21 March 2014   (p. A16).

    Norman, Jim.   "Authorities Warn of IRS Phone Scam."
    The Record.  21 March 2014   (p. A5).

    Richter, Ed.   "IRS scam continues to grow."
    The Journal-News.  23 March 2014.