How to Spot an IRS Scam

By George Khoury, Esq. on March 08, 2017 | Last updated on March 21, 2019

Don't declare the pennies on your eyes unless the IRS sends you something in writing. Scam artists are getting colder and bolder these days. Last year, a massive call center in India was shut down after it was discovered that scammers working in the center were scamming Americans out of thousands of dollars by pretending to be IRS agents.

My advice for those who get phone calls from anyone claiming to be an IRS agent: just hang up. Below you'll find three tips to help you identify when you are being targeted by a fake IRS scam.

1. The IRS Does Not Accept Gift Cards as Payment

As a preliminary matter, the IRS, and every other public agency, will not accept payment in gift cards. If you are being asked to provide gift card numbers over the phone, email, or any other way, you are being scammed. No legitimate business will accept gift cards as payment, unless it is that business's gift card.

Scammers are increasingly attempting to secure payments from their victims via gift cards because tracing those funds is incredibly difficult, if not impossible, as well as irreversible. Scammers in turn can sell or redeem the gift card codes for actual currency. Additionally, if the caller asks for a specific method of payment, particularly debit card, this is a big red flag.

2. The IRS Corresponds via Standard Mail

The IRS is not going to call you out of the blue about an audit. Nor will it text or email you about being audited. If you owe money, it will send you a letter and give you ample time to pay. The IRS is even rather generous when it comes to payment plans, as well as interest rates on those plans. Simply put, the IRS doesn't have time to call you. They generate form letters which get mailed using the federally owned United States Postal Service, and unless you don't pay, or you discover a problem and you notify them, don't expect to receive any other mail or other correspondence.

3. Threats of Arrest Are Red Flags

Arrests for tax violations are rare. If you get a call from someone claiming to be an IRS agent, or other federal or state agent, and they are demanding payment for taxes, or penalties, under threat of arrest, hang up the phone. The IRS will not threaten arrest for unpaid taxes, and as stated above, the IRS does not make telephone calls to collect debts.

To report an incident, contact the Treasury Inspector General for Tax Administration online or at 1-800-366-4484.

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