Scam Alert: When the IRS Calls, It’s Really a Crook

The phone rings. A stern voice on the other end of the line says the following: "This is Agent Harris with the Internal Revenue Service. You owe us $112,908 in back taxes and if we cannot resolve this now, we will have armed agents at your door within an hour and they will arrest you."

Who would fall for this? Paul Herman, a CPA based in White Plains, N.Y., said a client of his got a call very similar to that and, before it was over, she had sent off "five figures," said Herman, via MoneyGram, a wire transfer service.

In Cedar Grove, N.J., so many residents have recently been getting calls from the "IRS" that the police department just issued an alert.

In Chicago, the Better Business Bureau said that IRS scams have doubled in the past month. It added that callers demand immediate payment and threaten that if it is not received, the victim will be arrested or deported.

Those cities aren't alone. From Tulsa to Athens, Ga., police are warning residents that suddenly IRS related scams are epidemic.

In Washington, D.C., the US Treasury Inspector General for Tax Administration has issued a series of alerts about IRS related scams and, in particular, it has warned that the IRS does not ask for payment via iTunes gift cards, a payment vehicle that lately has been gaining favor with scamsters.

Don't snicker about iTunes. For many of us, the letters "IRS" send us into paralysis. "When we hear IRS, our brain freezes," said Don Bush, a vice president at fraud detection company Kount.

Scamsters know that, and they bank on it. The sheer number of IRS related alerts around the country right now says that many of us are falling victim.  Expect to see more, said Stephen Cobb, a senior security researcher at ESET. "If a particular scam works, it will take off," he added.

Remember this fact, said accountant Herman, and you have taken a big step towards self protection: The IRS does not initiate contact with a taxpayer with a threatening phone call. Nor does the IRS start off with a threatening email. How the IRS works, said Herman, is the agency sends - via U.S. Mail - a letter. That's right: an old-fashioned paper letter. "It's always correspondence," said Herman.

"[The IRS] will also never demand immediate payment, threaten to use police force for a bill they say you owe or ask for credit card numbers over the phone. All these actions would be big red flags," said Alex Reichmann, CEO of security company iTestCash.

Attorney Steven Weisman, who runs Scamicide.com, said similar: "There is no reason to consider any email, text message or phone call that purports to be from the IRS. This is true even when your Caller ID indicates the call is from the IRS when it is really from a scammer who is using a technique called spoofing to make the call seem legitimate."

Bush also said that every IRS agent has an employee number. "Ask for it - they will give it to you upon request," Bush said. Then call up an official IRS number and ask for agent number XYZ. Don't be surprised if there is no such agent or if there is, the one on the line has no idea what you are talking about.

Note: it is crucial not to call a number provided by the "agent," and that is because scamsters are known to man their own phone lines that are politely answered, "Internal Revenue Service."

What if you really did go seriously astray in your dealings with the IRS? In that case, maybe there will be agents at your door - but they will come with photo IDs and they won't demand MoneyGram or iTunes payments.

By now you may be wondering why there are so many IRS scams. Two reasons and the first is that there is a bounty of personally identifiable information - aka PII - about tens of millions of us for sale online in the dark web, said Tom Kellermann, CEO of Strategic Cyber Ventures. That makes it very easy to craft reasonably believable demands for money.

The second reason: "Most of these people are out of the country," said Herman, and chances they will ever face arrest for impersonating an IRS agent are slim to none. Their upside is lucrative, they have essentially no downside, so what's to stop them?

Only an informed public can do that. Understand: you won't get threatening calls from the IRS out of the blue. Ditto for emails or text messages. Remember just that and you know how to respond. Hang up the phone. Delete the email. And go about your day.

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

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