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Tax Scams: Know the Red Flags

Feb 01, 2021 5 min read Kevin Johnston

Key Takeaways

  • The IRS always calls about your bill—NOT.
  • Make sure your credit card is…tucked away and not pulled out!
  • They want your Social Security number. (What could possibly go wrong?)


It's that time of year when you have taxes on your mind. Unfortunately, so do scam artists. Tax scams happen every year during tax season just like clockwork. You can lose your money and expose your personal information because you think you are talking to an Internal Revenue Service agent when you receive a call about your taxes.



What a tax scam sounds like

You answer a call from a person who speaks in an authoritative voice and gives you an IRS badge number. The caller ID on your phone shows that the IRS is on the line. The "agent" knows your name and other information about you. You are told that you owe money, and that it must be paid immediately. The "agent" tells you to pay by purchasing a pre-loaded debit card or by using a wire transfer.

When you ask questions or resist, the fake agent becomes angry and threatening. You are told you will be arrested, and that in fact the police are coming soon. The agent tells you that you may be deported or have your driver's license suspended, and that you will be placed under arrest.


The red flags you should notice

  1. The IRS doesn't call.

    The first thing you should know is that the IRS mails a bill when you owe taxes. There is no IRS practice of calling taxpayers who owe money. The alleged badge number the caller gives you is fake, and so is the caller ID.

  2. The IRS doesn't demand that you use a particular method of payment.

    No IRS agent would ever tell you to use a prepaid debit card or wire transfer. It simply doesn't happen. If you did owe money, you could pay any way you choose. The card and transfer are simply ways for the scammer to get the money quickly.

  3. An IRS agent won't threaten to bring in the local police, the FBI or any other law enforcement organization.

    Tax matters are not settled with arrests, they are handled in hearings. You will not find the police at your door, and the FBI will not come after you. The IRS does not use law enforcement officers to deal with taxpayers.

  4. You won't be asked to pay without being given options.

    You always have alternatives with IRS matters, including appeals, negotiating payment plans and demonstrating that you have a hardship that prevents you from paying.

  5. Agents from the IRS will not ask for credit card numbers over the phone.

    You can pay the IRS using a credit card, but you do this online or by mail. Anyone on the phone asking for credit card numbers is a scam artist.

  6. The IRS won't ask you to give your Social Security number over the phone.

    A person asking you to tell him your Social Security number so he can "check" to make sure he is dealing with the right account is playing a trick. He is trying to deceive you into giving out your private information.

  7. An IRS agent won't yell at you.

    Many scam artists raise their voices and scream at you when they make threats. This is your clue that you are not talking to an IRS agent.

    All of these scams may be attempted by email as well as by phone. The IRS won't email you. If you receive an email that threatens you, asks for personal information, demands payment or involves law enforcement, it is a scam.


What you can do next

Every year tax scammers pose as IRS agents and prey on unwitting, anxious victims by phone. Recognizing some common red flags can keep you safe..


Kevin Johnston is a financial writer who writes about personal finance and investments, as well as financial management and planning. He has written for The New York Daily News, The New York Post, The San Francisco Chronicle and The Houston Chronicle.


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