Investor Alert – IRS Impersonation Scam: As if paying taxes wasn’t enough!

By Geoff Hafer, Spring 2016 Student Intern

So you are relaxing at home, feeling pretty good about life in general, when the phone rings. Someone on the other line claiming to be from the IRS…ugh, you think, this can’t be good…little did you know it’s about to get a lot worse. The “IRS agent” demands your immediate payment on taxes or face serious consequences. Before you even know what happened, you are wiring funds or using a pre-paid debit card to settle your tax obligations to ensure you are not arrested or have your driver’s license revoked. You have just become a victim of an IRS impersonation scam.

You would not be alone. According to FINRA, since October 2013, there have been reports of approximately 736,000 contacts and approximately 4,550 victims who have collectively paid over $23 million as a result of the scam! Even more frightening is that the scam has hit taxpayers in every state in the country and is becoming more and more prevalent.

So how can you protect yourself from becoming a victim?

First and foremost, know what the real IRS cannot and will not do.

• The real IRS will never call taxpayers and demand that they wire or send money on the spot. This is typically done by written notification of any tax due through U.S. mail

• The real IRS will not demand that you pay taxes without allowing you to question or appeal the amount you owe

• The real IRS will not require that you pay your taxes a certain way (i.e. prepaid debit card, wire transfer, etc.

• The real IRS will not ask for credit or debit card numbers over the phone

• The real IRS will not threaten to have police arrest you for not paying or revoke your driver’s license.

• The real IRS will never request personal or financial information by e-mail, text, or any social media.

Know your scammer.

• Scammers will often use fake IRS badge numbers and common names.

• Scammers may know the last four digits of your Social Security number

• Scammers often threaten jail time, driver’s license revocation and other drastic penalties

• Scammers can trick caller ID and make it appear as if the IRS is calling

What should you do if you have received a scam phone call?

• If you think you might actually owe taxes, call the IRS at 1-800-829-1040.

• Write down the phone number and report the incident to the IRS and to the Treasury Inspector General

• File a complaint with the FTC Complaint Assistant

For more information concerning such scams visit FINRA and in particular Investor Alert – Tools of the Fraud Trade: Phones and Emotions