Business Bulletin: Be wary of IRS tax scams

Jim Winsett of the BBB.
Jim Winsett of the BBB.

Q. The week of Nov. 27 is National Tax Security Awareness Week. What are the highlights of that event?

A. Thank you for the question and as we approach tax preparation season, it is a good time to remind consumers of the ongoing IRS tax scams and fraud that continue throughout the year. Focus needs to be given to fraud and the importance of security.

In 2016, the BBB processed approximately 2,700 reportable complaints against tax return preparation services and related businesses. Of those complaints; 1,600 against Tax Return Preparation companies, 600 against Tax Consultants, and 500 against other types of businesses (accountants, etc.) for issues pertaining to tax return services. Fact: in those complaints, the median disputed amount for which consumers sought BBB's help was $350-400.

photo Jim Winsett of the BBB.

In the BBB Scam Tracker online system, BBB received approximately 6,500 Scam Tracker scam reports from consumers regarding con artists claiming to be with the IRS. This comprised nearly 20% of all Scam Tracker reports received in 2016. (Note that this is nearly 2 1/2 times as many scam reports against criminals as complaints against legitimate businesses).

Red flag, scam tactics rely on intimidation, isolation, and/or pressure to act quickly. Tax collection scams often employ all three to bully their targets into compliance.

BBB has been providing the IRS with the phone numbers used by scammers that are reported to us through BBB Scam Tracker. Any law enforcement agency can request additional information from Scam Tracker and BBB is always willing to work with authorities to help stop this fraud.

Be advised that starting in 2016, there are contracted debt collectors working for the IRS. They will never threaten you, or ask you to make immediate payment by wire transfer, gift card, or prepaid debit card. If you are uncertain as to whether you owe money, contact the nearest IRS office directly, using the phone number listed on the IRS website at IRS.gov or on a tax form.

As a reminder, the IRS tax scam is a phone fraud by scammers pretending to be IRS employees. They call you and say you owe money for overdue taxes, and you have to pay right away in order to avoid further penalties. If you question them, they can get really aggressive and threaten to send someone to your house or workplace to arrest you. Some people pay even though they don't think they owe any taxes.

BBB advises how can you tell it's a scam?

The biggest red flag is that it's a call, not a letter. The IRS generally contacts you first in writing. If you've never gotten a letter from them about past-due taxes, that's a pretty good sign the call is a scam.

The second warning is that they ask for payment via wire transfer, prepaid debit card, even gift cards. The IRS would never do that. They also won't ask for a credit card over the phone. The only way to pay the IRS is by personal or cashier's check, or via their secure online portal.

And finally, the scammers demand immediate payment, and they often threaten taxpayers with immediate arrest, deportation, or loss of a business or driver's license. They get assertive quickly to scare you into acting before you think it through.

The IRS does not threaten taxpayers or demand immediate payment without explanation. Like many scammers, they often use automated robot call machines to contact you.

They may use common names and fake IRS badge numbers.

The scammer may know the last four digits of your Social Security number.

They can make the Caller ID show up as the IRS or another agency.

You may get bogus IRS emails as a follow-up to support their scam.

There may be second or third calls from the police or the department of motor vehicles, and the Caller ID will be changed to show those agencies.

Take this action if you get this kind of call?

Hang up. Don't engage with them. Don't confirm any information or even "press 1 to be transferred to an operator." Just hang up.

If you owe federal taxes, or think you might, call the IRS at 800-829-1040. Real IRS workers can help you sort it out.

You also can file a report with BBB Scam Tracker at bbb.org/scamtracker.

Jim Winsett is president of the Better Business Bureau in Chattanooga.

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