Back tax scam calls have been proliferating, preying on unsuspecting victims. Scammers pose as IRS agents or tax relief companies, aggressively demanding payment for fake tax debts. Don’t let them fool you – here’s what you need to know about these malicious calls and how to protect yourself.
Scam Overview
The back tax scam typically begins with a robocall or voicemail informing you that you owe back taxes to the IRS. The pre-recorded message urges you to call back immediately to avoid legal action. If you call back, you’ll speak to a real person posing as an IRS agent or tax relief specialist.
They’ll falsely claim you owe thousands of dollars in back taxes and penalties. To scare you into paying, they’ll threaten arrest, deportation, or revocation of your driver’s license. Some even spoof IRS phone numbers on caller ID to appear legitimate.
In reality, the IRS does not call taxpayers without sending written notices by mail first. They also won’t threaten legal action over the phone. But scammers exploit lack of public awareness about IRS procedures to coerce payments.
Once you’re on the phone, the scammers will pressure you to pay the “tax debt” immediately via wire transfer, prepaid debit card, gift card, or cryptocurrency. They may even have you stay on the line while driving to the store to purchase the payment method.
They rush to prevent you from verifying the validity of the debt. Scammers often target immigrants and non-native English speakers, assuming limited knowledge about IRS practices.
After extracting payment, the fraudsters disappear. Victims who later contact the real IRS discover no back taxes owed. But the damage is done, with losses averaging around $9,000 per person.
The IRS never demands immediate payment over the phone without first sending you a bill. They won’t require a specific form of payment either. These are both key indicators of a scam.
Why Back Tax Scams Have Exploded in Recent Years
Several factors have catalyzed the proliferation of back tax scams:
- Increased Use of Robocalling Technology – Automated robocalling allows scammers to make thousands of calls per minute at an extremely low cost. And caller ID spoofing technology masks the true originating number. This enables mass targeting while preserving anonymity.
- Tax Debt as a Common Fear – No one wants to owe taxes, so scammers exploit this innate fear of an IRS debt. Many don’t have a clear understanding of IRS collection procedures and fall victim out of ignorance.
- Immigrant Targeting – Scammers focus heavily on immigrant communities, counting on language barriers and lack of familiarity with the IRS to facilitate deception. Fear of deportation is also used as a threat.
- Anonymity of Payment Methods – Demanding payment via wire transfer, gift card, or cryptocurrency enables the scammers to quickly obtain funds while concealing their identity. This makes recovery efforts more difficult.
- Increase in Teleworking – With more people working from home, there are more potential targets during traditional working hours. Scammers have capitalized on the changing telework landscape.
- High Financial Stress – The pandemic has exacerbated financial hardship for many. Scammers know the fear of owing taxes and threat of legal action is now even more intimidating.
This potent combination of factors has created prime conditions for the back tax scam industry to thrive. Sadly, many victims don’t report losses out of embarrassment, allowing scammers to operate with impunity.
Who’s at Risk of Being Targeted?
Back tax scammers cast a wide net, blanketing millions with robocalls. But some demographics face elevated risk:
- Recent Immigrants – Language and cultural barriers make immigrant groups susceptible to manipulation about supposed IRS practices. Scammers also exploit fear of deportation.
- Elderly – Seniors may have cognitive decline or be less comfortable refusing aggressive demands. Con artists count on elders being more trusting of supposed authority figures.
- Low Income – Those struggling financially are already anxious about owing taxes. Scammers capitalize on desperation to extract payments.
- Small Business Owners – The self-employed often have variable, complex tax situations. Scammers paint them as prone to errors and demand payment of fictitious tax deficiencies.
- Tax Protestors – People involved in tax protest movements who view the IRS negatively may be more vulnerable to phone threats about harsh penalties.
- Prior IRS Issues – If you’ve had past tax debts or audits, scammers will leverage that history to convince you new issues have emerged.
- Non-Filers – People who haven’t filed tax returns in many years present an opportunity for scammers to allege fictional unfiled liabilities.
No single group has immunity, but extra vigilance is prudent if you fall into higher risk demographics. But scammers aren’t just targeting individuals. Small businesses are also prime targets.
How the Scam Works
Back tax scams unfold in several predictable stages:
1. Initial Contact Via Robocall
The first step is mass blasting automated robocalls to numbers often randomly selected by auto-dialers. The pre-recorded message claims you owe unpaid taxes and face dire consequences if you don’t call back immediately.
To incite maximum fear, threats of arrest or revocation of driver’s/business licenses are common. Some robocalls spoof IRS phone numbers to appear bona fide.
2. Speaking with the Fake “IRS Agent”
When called back, an actual scammer picks up posing as an IRS agent or tax relief specialist. They quickly begin making accusations about fictitious tax debts from previous years.
Fake names and badge numbers are provided to assert legitimacy. Caller ID spoofing allows them to display IRS numbers, adding to the deception.
3. Verbal Threats and Intimidation
Once on the phone, these swindlers relentlessly bully and frighten victims into paying immediately. Common intimidation tactics include:
- Threats of arrest, imprisonment, lawsuits, asset seizure, or deportation for immigrants.
- Allegations of serious tax code violations that require urgent action.
- Harsh warnings about dire consequences like losing your driver’s or business license.
- Fictitious claims that a lawsuit has been or soon will be filed against you.
- References to bogus audit documentation falsely evidencing tax debts.
- Requests for personal information like Social Security Number or date of birth to assert credibility.
4. Demand for Immediate Payment
After deploying threats and intimidation, the scammers pressure you to pay the fabricated tax bill straightaway. Payment methods like wire transfer, prepaid card, gift card, or cryptocurrency are insisted upon.
These allow fast access to funds while concealing the fraudster’s identity through untraceable or anonymous mechanisms. Victims may even be coached to stay on the phone while procuring payment.
5. Disappearance Act
Once the swindlers confirm receipt of your payment, they quickly disconnect and disappear. Victims attempting to follow-up discover the imposter IRS numbers are disconnected.
After contacting the real IRS, the disturbing truth becomes clear – no back taxes were ever owed. But the damage is already done, with little recourse to recover lost funds.
Common Tactics Used During the Scam Call
These crafty con artists employ an array of psychological tricks and pressure tactics to execute their schemes:
- Instilling Shock – Right off the bat, the fake agents deliver the unexpected “tax debt” news to stun and confuse victims.
- Feigned Understanding – Scammers pretend to be sympathetic and offer to help resolve the contrived issue. This builds false rapport.
- Good Cop/Bad Cop – One scammer berates and threatens, then passes you to a “supervisor” who seems kind and helpful in contrast. This change in demeanor is disarming.
- Citation of Real Laws – Quoting legitimate IRS codes and penalties boosts perceptions of authenticity. But details are usually incorrect or misapplied.
- Request for Secrecy – Victims may be told not to discuss the supposed tax debt with anyone else, including their financial advisor or accountant. This isolates them from sound advice.
- High Pressure Tactics – Refusals to pay are met with bombastic threats and doomsday warnings, applied until the victim ultimately capitulates.
- False Urgency – Scammers stress the importance of handling the fabricated tax issue immediately to avoid purportedly dire legal consequences. This pressures victims into hasty compliance.
Staying lucid during these frenzied pitches requires concerted mental effort. Sadly, these slick psychological tricks have enabled the thieves to rake in billions from distraught taxpayers.
Red Flags to Spot Back Tax Scam Calls
While the criminals plead a convincing case, several red flags can tip you off:
- Threats of Arrest or Legal Action – The IRS does not threaten arrest or lawsuit over the phone as an initial contact. Written notice of tax debt is always mailed first.
- Demand for Immediate Payment – The IRS does not demand instant payment via difficult-to-trace methods without allowing time to verify the debt’s validity.
- Refusal to Allow Consultation – Scammers often forbid checking with your tax advisor, accountant, or the IRS directly. This prevents discovery of the ruse.
- Will Not Send Written Documentation – When pressed, scammers refuse to send official documentation validating the supposed tax debt.
- Odd Payment Methods Insisted Upon – Wire transfer, gift card, prepaid debit card, and cryptocurrency are pushed since they offer the recipient anonymity.
- Will Not Wait for Return Call – IRS procedure is to leave a call back number and allow a reasonable timeframe for the taxpayer to respond. High-pressure tactics betray ill intent.
- Threat of License Revocation – The IRS lacks authority to revoke driver’s or business licenses. Any such threats are empty and illegitimate.
- Call from Unknown Number – IRS representatives call from agency phone numbers verified on the IRS.gov website. Calls from unknown or blocked numbers should raise suspicions.
- Incorrect Info Provided – When pressed for identifying details, scammers get your Social Security number, case number, or other facts wrong.
- Sum Due Keeps Changing – Scammers invent arbitrary tax debts on the spot and often change alleged owed sums when questioned.
Stay alert and don’t fall prey. Contact the IRS directly to validate any communications about unpaid taxes. The Treasury Inspector General for Tax Administration also maintains a hotline to report suspicious IRS impersonation scams.
What to Do If You’ve Fallen Victim to the Back Tax Scam
If you’ve already succumbed to a back tax scam, take these steps to mitigate damage:
1. Contact Banks and Gift Card Companies Immediately
If you paid by wire transfer or gift card, quickly contact the bank or gift card company to try stopping the transaction or retrieving the funds. Speed is critical for any chance of recovering your money.
2. Notify the IRS
Alert the IRS of the interaction so they can investigate the scammers and note in your account that the debt is fraudulent. Provide details that may help track the criminals, like phone numbers used and payment methods.
3. File a Police Report
File a report with your local police department or the FBI’s Internet Crime Complaint Center (IC3). Provide all available details and request a copy of the report for your records.
4. Report to the Treasury Inspector General
The Treasury Inspector General for Tax Administration (TIGTA) investigates scams impersonating the IRS. You can report details to help build cases against the fraudsters.
5. Monitor Your Credit
Check your credit reports and continue monitoring closely for signs of possible identity theft. Scammers who obtain personal information sometimes leverage it for ongoing access to accounts and credit.
6. Warn Relatives
Alert family members and close connections about the scam call. Share information to keep others vigilant against possible targeting.
Sadly, recovery of lost funds is rare once scammers receive payment. But reporting helps authorities in pursuing and prosecuting these predatory criminals.
The Bottom Line – Protect Yourself from Back Tax Scam Calls
Back tax scams show no signs of slowing. Use these precautions to avoid becoming another victim:
- Remember the IRS first contacts taxpayers about unpaid taxes via postal mail, never by phone.
- Treat any call demanding immediate tax payment with suspicion. Ask for a call back number and directly phone the IRS to confirm validity.
- Don’t fall for threats of lawsuit, arrest or deportation. These scare tactics are virtual guarantees of a scam.
- Consult your tax advisor or accountant about any tax-related calls before taking action. Getting sound advice can prevent costly mistakes.
- Know that prepaid cards, gift cards, cryptocurrency and wire transfers are preferred by scammers due to anonymity. Refuse demands for payment via these methods.
- Understand the IRS will allow reasonable time to handle a tax debt and never insists on unconventional payment types. Pushy demands for instant payment signal a scam.
- Be especially wary of robocalls from unknown numbers. The IRS does not contact taxpayers en masse via automated calling.
- Report any suspicious calls to the Treasury Inspector General for Tax Administration. Share details to assist in combating these ruthless scams.
With awareness and caution, you can identify and sidestep back tax scam calls. Don’t become another statistic. Stay vigilant and safeguard your hard-earned money.
Frequently Asked Questions about the Back Tax Scam
1. How do I know if a call about owing back taxes is a scam?
The IRS always sends several written notices by mail to a taxpayer’s last known address before calling them. If you receive a robocall out of the blue claiming you owe back taxes, it’s almost certainly a scam attempt. Any call demanding immediate payment over the phone without chance to verify the debt is illegitimate.
2. What techniques do the scammers use on the phone?
Scammers posing as IRS agents use threats and intimidation to bully victims into paying fake tax debts. Tactics like threats of lawsuit or arrest, revoked licenses, deportation, and fabricated penalties are common. They also cite real IRS codes and legal processes, but often get details wrong.
3. How can I determine if a supposed IRS caller is real?
Ask for credentials like a name and badge number, then call the IRS directly to confirm if they are a legitimate representative. IRS agents will not refuse to provide credentials or threaten you if questioned. You can also research any call back numbers provided on the IRS website to check validity.
4. What type of payment do the scammers ask for?
Scammers push victims to pay via wire transfer, prepaid debit card, gift cards or cryptocurrencies that offer anonymity and make retrieving funds difficult. The IRS does not demand payment via these unconventional methods as an initial form of contact.
5. What should I do if I already paid a back tax scam?
Quickly contact your bank or card provider to try stopping the transaction. File reports with the Treasury Inspector General for Tax Administration, IRS, FTC, and your local police. Monitor your credit closely for signs of identity theft. Notify relatives so they can avoid being targeted also.
6. Why do the scammers threaten me with deportation or license revocation?
These threats are fabricated to stoke fear and coerce payment. The IRS cannot revoke driver’s or business licenses nor initiate deportation proceedings. Any such threats are sure signs of a fraudulent call.
7. How can I get my number off the scammers’ call list?
Request to be added to the IRS “Do Not Call” list. You can also register your phone number on the National Do Not Call Registry. Consider using call screening and blocking tools from your phone carrier as well.
8. Are small businesses also targeted by the back tax scam?
Yes, scammers realize small business owners often have variable finances and tax situations, making them potentially vulnerable targets. Any call about unpaid business taxes warrants extra precautions to verify legitimacy.
9. Where can I report a back tax scam call?
Report details to the Treasury Inspector General for Tax Administration via their website or hotline at 1-800-366-4484. You can also file a complaint with the Federal Trade Commission and your state attorney general’s office.
10. How can I protect elderly relatives from the back tax scam?
Educate them to never engage with questionable calls demanding immediate payment. Have them refer all tax-related calls to you or their tax preparer to evaluate legitimacy before taking action. Sign them up for robocall blocking services as well.
