In press release TIGTA 2015-01 J. Russell George, Treasury Inspector General for Taxpayer Administration (TIGTA) warned of the threat of phone scams where the individual claims to represent the Internal Revenue Service in order to defraud individuals. Now the California Board of Equalization has issued a separate warning in News Release 27-15-G to taxpayers that a similar scam is taking place for California state taxes.
Phone scams have become the new favorite tool for those running scams since some individuals may mistakenly believe they are safe from scams and financial risks if they avoid online interactions. The criminal generally uses information obtained about the mark from various sources to convince them that they represent the IRS and, often, that unless the mark does something immediately (like give a credit card number, buy a prepaid debit card to send to the government, etc.) some dire result will occur.
TIGTA has established a webpage for individuals to report such contacts at http://www.treasury.gov/tigta/contact_report_scam.shtml. The release reports that since October of 2013 TIGTA has received reports of over 290,000 contacts and has discovered nearly 3,000 victims who have lost over $14 million. Given that most of the population is unaware of that website and, as well, many may be embarrassed to admit they fell for a scam even if they are aware of the site, it seems reasonable to assume the real reach of the scam is far wider.
TIGTA first piece of advice is to hang up on these callers—as the press release notes, they will say virtually anything to convince you to part with the information and/or funds they are seeking. The Inspector General notes “If someone unexpectedly calls claiming to be from the IRS and uses threatening language if you don’t pay immediately, that is a sign that it really isn’t the IRS calling.”
The scammers will demand individuals pay using a prepaid debit card or wire transfer. They will also indicate that if the individual does not immediately comply they will face immediate arrest, deportation or loss of a business or driver’s license.
The release notes the following traits about these callers:
- Utilize an automated robocall machine.
- Use common names and fake IRS badge numbers.
- May know the last four digits of the victim’s Social Security Number.
- Make caller ID information appear as if the IRS is calling.
- Send bogus IRS e-mails to support their scam.
- Call a second or third time claiming to be the police or department of motor vehicles, and the caller ID again supports their claim.
The California Board of Equalization release describes very similar behavior. This isn’t surprising—the same basic scam can be easily modified to work to masquerade as any taxing agency and/or law enforcement agency. Thus advisers should presume that the state level fraud is not limited to the Golden State—but rather either has or will likely spread to impact clients in every state.
The IRS release goes on to suggest steps a person getting such a call should take:
- If you owe Federal taxes, or think you might owe taxes, hang up and call the IRS at 800-829-1040. IRS workers can help you with your payment questions.
- If you don’t owe taxes, fill out the “IRS Impersonation scam” form on TIGTA’s website, www.treasury.gov/tigta or call TIGTA at 800-366-4484.
- You can also file a complaint with the Federal Trade Commission at www.FTC.gov. Add “IRS Telephone Scam" to the comments in your complaint.
The release also advises individuals to take care about emails claiming to be from the IRS. Such emails should be forwarded to email@example.com.
However, recipients of such emails should not open any attachments or click on any links in those emails. In addition to being involved in frauds trying to obtain cash, those links and attachments may very well be delivery mechanisms for malware attempting to get itself installed on the recipient’s computer or phone for various nefarious purposes.
Adviser may wish to consider including warnings about such scams in communications with clients. While most advisers know enough to immediately recognize a scam, most of our clients are likely not so aware of how the IRS and other tax agencies actually work to be able to immediately spot a fraud.