How the scam works:
Fraudsters make unsolicited calls claiming to be IRS officials. They attempt to trick the potential victim into paying a phony tax bill, usually requiring payment through a wire transfer or a prepaid debit card or gift card. They may also leave “urgent” callback requests through phone “robo-calls,” or send a phishing email.
Many phone scams use threats to intimidate and bully a victim into paying. They may even threaten to arrest, deport or revoke the driver’s license of the victim if they do not get the money.
Fraudsters often alter caller ID numbers to make it look like the IRS or another agency is calling (“spoofing.”) The callers use IRS employee titles and fake badge numbers to appear legitimate. They may use the potential victim’s name, address and other personal information to make the call sound official.
The IRS will never:
- Call to demand immediate payment using a specific payment method, such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
- Threaten to immediately bring in local police or other law enforcement groups to have the taxpayer arrested for not paying.
- Demand that taxes be paid without giving taxpayers the opportunity to question or appeal the amount owed.
- Ask for credit or debit card numbers over the phone.
Important things to know if contacted about delinquent taxes by an IRS private collector:
- Private collectors for the IRS cannot accept direct payments — all payments should be made to the U.S. Treasury. The agency will not require specific types of payments, such as wire transfers or prepaid debit cards. Scammers prefer these methods because they are hard to trace and can be redeemed anywhere in the world.
- Unless the IRS has an incorrect address, both the agency and its private collectors should first make contact by mailed letter.
- Those who have tax debt but cannot pay in full will be offered an installment plan for up to five years.
- The same rules of other debt collectors apply: No calls before 8 a.m. or after 9 p.m. Debtors must be sent written “validation notice” stating the amount owed within five days after first contact. No harassing, abusive or threatening language is allowed.
- Certain tax bills (and, therefore, phone calls) cannot be handled by private collectors for the IRS — those for taxpayers who are deceased, under age 18, in a designated combat zone, or a victim of identity theft. Debtors currently in audit, litigation or criminal investigation are also off-limits to third-party private collectors.
Identity Theft Refund Scam
How the scam works:
Fraudsters are stealing year-end statements, W-2s and other income information to file fraudulent returns, claiming to be the victim. While there are a variety of ways to receive a legitimate tax refund, including via direct deposit (often the fastest), funds loaded onto a prepaid card, or check mailed to a selected address, fraudsters that file illegitimate tax returns often choose a prepaid card for the refund because it is as good as cash and cannot be traced or recovered.
How to protect yourself:
- Shred any paperwork not needed for tax preparation.
- What to shred. Checks from a credit card company offering low annual percentage rates for balance transfers and other pre-approved credit offers should be shredded upon receipt if you do not plan to use them. Once reconciled with corresponding accounts, ATM receipts, canceled checks, and pay stubs can all be shredded.
- What to keep. Hang on to monthly banking, brokerage account, and credit card statements. Once you have reviewed the statements and addressed any inaccuracies, you can shred them when the year-end statement arrives. Certain papers should be retained for life, including divorce and estate documents and annual retirement plan forms. Per IRS recommendation, keep filed tax returns that do not require additional payments for three years.
- Go digital. The best way to minimize year-end paperwork is to minimize paperwork in general. Whenever possible, opt out of credit card offers, request that banks not send blank checks if you do not plan to use them, and choose to receive forms digitally. Sign up for Bethpage’s Digital Banking to eliminate the need for physical checks, and use our app to set alerts to notify you of all of your account transactions. Tax returns can also be filed digitally on secure servers, and copies of the completed forms downloaded directly to a personal computer.
- Be suspicious of any phone calls or emails claiming to be from the IRS, even with the appropriate logos. According to the IRS website: “The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.”
- Do not put your tax return in your office mailbox or in an outgoing mail bin at work. When filing taxes by paper, take them directly to the post office and put them right into a postal worker’s hands. Tax returns are obvious, and can easily be snatched.
- Finally, do not get complacent. Odds are you will file your tax returns without incident this year, but tax ID theft is a growing trend. The best way to avoid being a victim this year, and in future tax seasons, is to remain vigilant.