Avoid these tax scams like the plague

By Robert E. Holtfreter, Ph.D., CFE, CICA, CBA

Taking Back the ID: Identity theft prevention analysis

Duke Winston thought of himself as being very astute and knowledgeable when it came to current events, especially when they were related to the business world. He had two degrees in business, worked in the public relations department of a Fortune 500 company and was a faithful reader of The Wall Street Journal and other business periodicals. But he wasn't ready for what was going to happen next.

One day he received a telephone call supposedly from a U.S. Internal Revenue Service agent. The caller tried to establish his credibility by using a fake name and bogus IRS badge number. He was cordial but aggressive when he told Duke he owed the IRS more than $1,000. He said Duke needed to pay to avoid arrest. The caller told Duke to buy a prepaid debit card and call him back with the card's number. Duke followed the caller's instruction and succumbed to the scam.


Though this particular case is fictional, it describes a very real scam that ranks near the top of the IRS's "Dirty Dozen" list of tax scams for 2015. The IRS views it as one of the worst impersonation scams in its history.

According to the Feb. 15 IRS article Phone Scams Continue to be Serious Threat, Remain on IRS ‘Dirty Dozen' List of Tax Scams for the 2015 Filing Season, the scammers call individuals of all income levels and backgrounds but tend to "prey on the most vulnerable people, such as the elderly, newly arrived immigrants and those whose first language is not English."

They typically create an atmosphere of complete panic which, when paired with threats, catches victims off guard and frightens them to make payments.

This tax scam is not new. According to a March 12 New York Daily News article, IRS official says he was targeted by fake agents who have taken $15.5M from taxpayers tricked into paying, by Dan Friedman, Timothy Camus, a deputy inspector general for tax administration for the Treasury Inspector General for Tax Administration office (TIGTA) says the IRS has received reports of more than 366,000 people falling victim to the scam since October 2013. "At least 3,000 people have fallen for the ruse since 2013," Camus testified [to the Senate Finance Committee], "and the scam has claimed victims in almost every state." Fraudsters have conned victims out of a total of $15.5 million, with one victim losing more than $500,000.


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