The Internal Revenue Service never fails to warn the public about the common forms of IRS scams. And yet, a lot of people still fall prey to these bogus activities. IRS scammers have become more creative in deceiving and extorting money from their targets. Learn from some real life IRS tax scam stories to prevent you from becoming the next victim.
Beware! 7 True-to-Life Stories of IRS Scams
IRS Scams #1: IRS Lawsuit Threat via Phone Calls
Among the most commonly reported form of scam involves fake IRS calls. The victims claimed an “IRS representative” called and threaten them with an IRS lawsuit unless they settle their alleged tax dues.
This is what happened to former National Football League (NFL) player Frank Garcia. In 2015, he got a call from an IRS scammer who claimed he has a pending arrest warrant for some unpaid taxes. Fearing the supposed IRS lawsuit, he immediately deposited $4000 as instructed by the IRS scammer. He found out later on that there’s no case filed against him and that it was just a scam.
The IRS reminds that if there are actual tax discrepancies, it sends notices via emails and not via phone calls.
IRS Scams #2: IRS Lawsuit Threat with Personal Appearance
In some instances, fake IRS calls are not enough. Some scammers even have the guts to knock on their victims’ houses to execute their scheme.
On May 2018, a resident of Edmunds County in South Dakota reported that a person dressed as a police officer appeared at his house. As if right on cue, he got a phone call saying that the supposed police officer was there to collect the money he owed the IRS.
The Edmunds County Sheriff’s Office Facebook page has already alerted residents to be vigilant of this IRS scam. Meanwhile, the IRS reminds us that it does not make phone calls to inform taxpayers about any tax deficiencies.
IRS Scams #3: Bogus “Student Tax”
Not only working-class taxpayers receive fake IRS calls. There was a time when scammers targeted students by using a non-existing “federal student tax” as a threat.
In 2016, some students at the Michigan State University reported getting calls from supposed FBI agents calling on behalf of the IRS. The caller orders the students to immediately settle their unpaid “federal student tax.”
Most students fell prey to this scheme because they were unaware of the whole taxation system, and they didn’t know there’s no tax for students. Among the targets were immigrant students, who got deportation threats if they didn’t cooperate with the scammers.
IRS Scams #4: Donations to Fake Charities
As per the IRS, donations to charitable institutions can be part of a taxpayer’s itemized deductions. That’s why most taxpayers grab the chance to make donations and make them part of their deductibles. Unfortunately, this is also a good opportunity for IRS scammers to extort money.
After the onslaught of Hurricane Harvey in 2017, many so-called charitable organizations emerged and sought cash donations for the disaster victims. Unfortunately, the IRS has figured that not all these organizations were real, and some were simply out there to scam people. Some IRS scammers send bogus emails claiming to be part of (or affiliated with) certain organizations to get either cash donations or financial details from their victims.
The IRS reminds us that only donations to recognized organizations are tax deductible. Donors must first establish the authenticity of the organizations they approach for help. Also, the IRS advises people not to easily give out cash or financial details to other people or institutions.
IRS Scams #5: Nigerian Scammers
In some reported instances, it’s not only the taxpayers who fall prey to some IRS scammers. Even the IRS gets to be the victim at a time, even losing a lot of money because of some illegal transactions.
In 2017, authorities arrested some Nigerian nationals following the discovery of a scheme where they stole personal identities (either through mail phishing or by hacking computer systems) to do tax refunds. It was a scheme found as early as 2013 when a couple in Oregon complained of having tax returns filed electronically under their names without their knowledge.
The arrested Nigerian nationals are still serving jail terms in the U.S. Also, this discovery led to some changes, which includes the IRS stopping its “Get Transcript” program in 2015.
IRS Scams #6: Email Phishing
For electronic hackers, email phishing is an effective and proven way of stealing vital information from companies. Unfortunately, computer-savvy IRS scammers were able to utilize this to their advantage.
In early 2018, an employee of the Batavia City Hall in Chicago, Illinois received an email which appeared to come from one of the city administrators. The email requested for all of the city hall employees’ W-2 information, which the employee granted. It turned out that the email was bogus.
It was a dangerous act on the part of Batavia employees because the IRS scammers might use the stolen information to file returns and refunds on the taxpayers’ behalf. Since the incident, the city has started free credit monitoring and has started reviewing its policies on handling financial data.
IRS Scams #7: “Erroneous” Tax Refunds
Tax scammers have become more creative with their schemes through the years. Unfortunately for them, the IRS discovers their novel illegal acts and informs the public about the modus immediately.
Among the latest fake IRS calls involve scammers telling their victims about incorrectly allocated tax refunds. But unknowingly to the victims, the scammers have already stolen their identities and have actually filed their returns for refund. This means the victims are being tricked to give away the money they should actually receive in the first place.
For this particular scheme, the IRS reminds taxpayers to file their tax returns for refunds as soon as possible.
Despite consistent warnings, these IRS scams continue to persist and deceive the public. Call the IRS or any local authorities immediately if you believe an IRS scammer is bugging you or your neighborhood.
Have you encountered fake IRS calls or other forms of IRS scams? Share with us your experiences in the comments section below.
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