If the IRS Calls, It May Be OK to Hang Up!!
FINRA recently released an Investor Alert, entitled Tools of the Fraud Trade: Phones and Emotions, warning seniors and other investors about a new IRS impersonation scam.
The basic scam involves a very aggressive and authoritative caller who tells the victim that he or she owes back taxes and proceeds to demand immediate payment of taxes by credit card or other electronic payment. These demands may be accompanied by threats of prosecution if the victim doesn’t pay. The fraudster may use a fake badge number, may use personal information about the victim found on the internet, and may have a fake caller ID number intended to link the call to the IRS in some way. These lies are intended to build up the fraudster’s credibility, in order to get the victim to let his or her guard down.
These tactics work because people are understandably nervous about tax audits and owing back taxes. If someone believes the IRS is calling, one may be more likely to drop his or her normal defenses in the heat of the moment and provide personal financial information. Using these high pressure, emotion-based tactics has led to losses estimated at $23 million to taxpayers since October 2013.
The most important thing to know is that the IRS will always send a bill in the mail for past-due taxes, so if you haven’t received a letter in the mail, the call is more than likely a scam. In addition, the IRS will never demand immediate payment over the phone, and the IRS will always grant you an opportunity to question or appeal the amount owed. The IRS will also never ask for credit card or bank account numbers over the phone; you can always submit a check.
If you are a victim of this type of scheme, there are a few things you can do. First, write down the number of the person calling you and any other details you get, such as the person’s name and badge number. Then, call the Treasury Department’s Inspector General for Tax Administration at 800-336-4484 and either (a) confirm the authenticity of the call; or (b) report the incident. You can also call FINRA’s Securities Helpline for Seniors at 844-574-3577, if the caller in any way references your investment accounts.