No Treat in this IRS Scam Trick

Angie L Smith

By Angie L. Smith

Millions of Americans are receiving an “urgent” message from someone claiming to be from The Department of Treasury or the Internal Revenue Service (IRS). Once called, the “IRS” agent demands payment on your IRS taxes. Call recipients are threatened to pay up or be sued, or even be arrested if they do not comply. This has become the largest IRS impersonation phone scam in history and boils down to the psychology of fear and widespread ignorance about scams and IRS taxes.

Russell George, Treasury Department Inspector General, says tax fraud victims have lost over $36.5 million from nearly 6,400 of those contacted by the scammers and has warned taxpayers to be on “high alert.” George also stated that they have received over 1.2 million reports of scam calls. Victims are tricked into paying hundreds or thousands of dollars aft er receiving phone calls supposedly from IRS agents. These impersonators are demanding payment through any of the following: bank wire transfers, iTunes gift card purchases, prepaid debit cards, Western Union, Money Gram or bank cash deposits made into someone else’s account.

These figures reinforce a basic question – how are people convinced that they should purchase one or more iTunes gift cards, debit cards, money grams, etc., worth hundreds and thousands of dollars to pay a tax debt? The idea that a government agent would demand an item such as a gift card redemption code or reloadable pre-paid card for payment defies logic.

Over the years, the attackers’ means may have evolved, but their goal remains the same: to trick victims into giving out personal information, such as their social security numbers, account login information and money. Scammers oft en use malware, such as Trojan spyware, banking Trojans, or remote access tools to gain access to potential victims’ computers or bank accounts. The IRS has not been remiss in warning taxpayers about scams. It has, in fact, been coming out with the “Dirty Dozen” list of tax fraud scams since 2004 to assist taxpayers in staying safe from these fraudsters.

The key to understanding the IRS scam trick is to know how one person can psychologically manipulate another, an information security subfield called social engineering. A taxpayer’s fear and anger drives their irrational behavior that at times can briefly shut down the logic center of the brain. Not to mention, there are few things scarier than hearing an IRS agent tell you that you owe thousands in taxes and you will be arrested, deported or lose your home and car if you do not pay immediately.

These calls can almost always be elucidated as scams as the IRS does not solicit payments by phone or even email, as the IRS always communicates via U.S. mail. This fact, though widely publicized, does not stop scammers from calling millions of taxpayers and does not stop people from falling for the trick. The IRS has advised that there are multiple scam “groups” operating. One group in particular has called over 896,000 people with more than 5,000 of those contacted handing over $26.5 million as of February 2016. The scammers oft en virtually hold the hands of the victims, not letting them off the phone until money is wired to a distant location.

A crackdown on all IRS tax scammers may be next to impossible, but every step toward that direction counts. The IRS has been constantly exerting efforts to warn taxpayers about all kinds of fraud. Unfortunately, tax scams work because a lot of people constantly fall for them.

The most recent arrest of five individuals in Miami in March 2016 was the biggest crackdown on the scam groups to date. The five suspects were charged with wire fraud and conspiracy to commit wire fraud and are suspected of obtaining over $2 million in schemes from over 1,500 victims. The Treasury Department has found it difficult to catch the perpetrators as, in most cases, they are located out of the country and even if located, the officials cannot make an arrest. The recovery of the victims’ loss is an impossible task. Most of the time, the money has already been picked up prior to the officials receiving a report. The truth is fighting cybercrime is everyone’s responsibility.

Awareness is the ultimate step to avoid becoming an IRS tax scam victim. Every taxpayer needs to know how the IRS works, so they will not be tricked even by the most elaborate and very convincing scams. The best way to deal with it is simple: file as early as possible, open all of your mail and never give anyone cash for tax payments. Unfortunately, tax fraud is a fact of life. With more than a billion personal records “floating around out there,” identity theft has become the third certainty in life, right behind death and, ironically, taxes.


Angie Smith started her own practice, TaxSmith, after years in the tax industry. Nationally serving clients, TaxSmith has quickly become one of the fastest growing tax firms in the nation, focusing exclusively on tax law with resolution and tax preparation departments for both personal and business clientele. Angie graduated from the University of North Carolina and Florida Coastal School of Law. She is a member of the Florida Bar, Florida Middle District and Eleventh Circuit Court of Appeals. Being bold, creative and mindful in your everyday actions are lessons she learned from her parents and has help to shape who she is today.