IRS Watchdog Says Phone Scam is Largest Ever

By: BBB; AP
By: BBB; AP

ROCKFORD (BBB) -- According to recent reports more than 20,000 taxpayers have been the target of phone calls from scammers impersonating IRS agents and totaling a loss of over 1 million dollars. This phone scam is just one of the techniques that scammers use to rip-off unsuspecting consumers. The “dirty dozen” is a list of tax scams that the Better Business Bureau of Chicago and Northern Illinois is warning consumers about.

The phone scam being number one others on the list include:

Identity Theft - The IRS continues to be overwhelmed by identity theft, which occurs when a fraudster uses someone else's name and social security number to claim refunds.

Phishing - If you receive an e-mail that appears to be from the IRS and asks for personal information, it's most likely a phishing scam that wants your identity and your money. The IRS does not reach out to taxpayers via e-mail, texts or social media, so relay any such messages to phishing@irs.gov.

"Free Money” - Be wary of fliers and ads promising "free money" from the IRS or anyone offering a refund that sounds too good to be true. Some scammers target low-income and elderly people, often through churches, convincing them to claim credits they aren't entitled to -- and even Social Security rebates that don't exist. These con artists often charge up-front fees and disappear without a trace before the IRS rejects the claims. The victims don't just lose the scammer's "fee" -- they could also get hit with a $5,000 penalty for making intentional errors on their return.

Return preparer fraud - From inventing extra children to stealing identities, some preparers are bad news. Make sure your tax preparer has an IRS Preparer Tax Identification Number (PTIN). If a preparer doesn't put this number on your tax return as required, or fails to sign the form, that should raise a red flag. And watch out for preparers who base fees on the size of your refund.

Hiding income offshore - Don't let anyone convince you it's a good idea to hide income abroad. The IRS has been cracking down on taxpayers who do this and has collected billions of dollars in back taxes and penalties from tax cheats since 2009.

Fake charities - It's common for scammers to create fake charities to fraudulently collect money -- especially in the wake of disasters. Before giving money to a charity, verify that the organization is legitimate and that your donations will be tax deductible by using the IRS's Exempt Organizations Select Check. And don't give cash -- use a check or credit card so you have proof of payment. Inflating income and credits

Boosting income or expenses - Getting bigger credits than you deserve can get you in big trouble with the IRS. If you get caught, you'll have to return any fraudulent refund and pay interest and penalties on any amount owed.

Frivolous arguments - Trying to get out of paying taxes? Here are some arguments that will never work: “Filing a tax return is voluntary”, “only gold-based money is taxable” or “your state isn't part of the United States.” Anyone who tries to tell you differently can't be trusted. These are considered frivolous arguments and will be rejected, and you could face a number of penalties.

Falsely claiming no income -Taxpayers who fall prey to schemes convincing them to falsely report their taxable income as zero could face a penalty of $5,000.

Evading taxes - Some shady investment advisers and tax preparers are creating and promoting complicated tax structures and shelters that clients can use to evade taxes -- often involving multiple entities and offshore accounts. If someone has tried to convince you to evade taxes, report the incident using Form 14157.

Abuse of trusts - Common schemes recommend you transfer money into trusts to reduce your income and avoid paying taxes. While there are appropriate uses of trusts, the IRS has seen a growing number of people improperly using them. The rules governing trusts can be very complicated, so to avoid getting caught up in an illegal arrangement, the IRS recommends consulting with a tax professional.

"These scams are spreading and consumers need to understand the risk of financial harm that can occur to them by providing personal information and sending money to scammers” says Dennis Horton, director of the Rockford Office of the Better Business Bureau “The best protection is suspicion don’t put your trust in any unknown person who contacts you.”

Tips to avoid being scammed:

• Don’t give out your financial information over the phone. The real IRS will not ask for financial information over the phone. Any contact from the IRS will be through direct mail.
• Hang up the phone. If you are being asked for personal and financial information by someone claiming to be an IRS employee, simply hang up.
• If you receive an email, trash it. The IRS will not attempt to contact you through email. If you receive an email from someone claiming to be the IRS, then it is probably a scam. Emails that scammers send may include computer viruses that could harm your computer or access personal information.
• Report the incident. If you are a victim of this scam, report the incident to the Treasury Inspector General for Tax Administration at 1-800-366-4484. You should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” Make sure to add “IRS Telephone Scam” to your comments.

For more advice on scams, visit www.bbb.org


WASHINGTON (AP) -- A government watchdog says more than 20,000 taxpayers have been targeted by fake IRS agents in the largest phone scam the agency has ever seen.

The IRS inspector general says thousands of victims have lost a total of more than $1 million. As part of the scam, fake IRS agents call taxpayers, claim they owe taxes, and demand payment using a prepaid debit card or a wire transfer.

Those who refuse are threatened with arrest, deportation or loss of a business or driver's license.

J. Russell George is the IRS inspector general. He said Thursday that real IRS agents usually contact people first by mail. He says real agents don't demand payment by debit card, credit card or wire transfer.

He says people have been targeted in nearly every state.


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