7 Signs You Could Be a Target of a Tax Scammer

By Matthew Frankel Markets Fool.com

The tax deadline is right around the corner, and millions of Americans are in the process of filing their returns, while millions more have filed within the past couple of months. Whichever group you're in, there are scammers that would love to make you their next victim. To make sure your money goes only where it's supposed to, here's a quick guide to how tax scams work and seven signs you may be dealing with an impostor.

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IRS phone scams are not going away

In a nutshell, a phone scam involves a thief calling and pretending to be an IRS agent, in an attempt to get you to either send them money to "pay a tax bill", or to reveal sensitive personal information, which can then be used to steal your identity.

Image source: Getty Images.

Unfortunately, not only do these scams continue to exist, but scammers are getting more sophisticated and tougher to spot. "These scammers continue to adapt and evolve, and the IRS continues to receive reports of these schemes using multiple languages trying to find victims across the country," IRS Commissioner John Koskinen said recently.

There are too many varieties of phone tax scams to mention here, but common versions involve a supposed IRS agent claiming that you owe tax, which must be paid immediately.

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Fortunately, phone scams are easy to avoid if you know what to watch for. Specifically, here are some things the IRS will and will not ever do.

  • The IRS will never call to demand immediate payment.
  • The IRS will never demand a specific payment method, such as a prepaid debit card or wire transfer.
  • The IRS mails a bill first before attempting to contact a taxpayer by phone.
  • The IRS will never threaten to immediately bring in local police or other law enforcement.
  • The IRS will always give you an opportunity to question or appeal the amount it claims you owe.
  • The IRS will never ask for credit or debit card numbers over the phone.

Email and text scams

It's also important to mention that email scams are a big problem as well, where you receive an email supposedly from an IRS agent or are directed to a website that supposedly is run by the IRS. And many of the warning signs listed above apply to emails as well -- for instance, the IRS will never email you to demand immediate payment of a balance you owe.

In addition, be sure you're aware that the official IRS website is www.irs.gov and all official IRS pages begin with that prefix. Don't be fooled by variations, such as irsgov.com.

Finally, since scammers are evolving continuously, scams conducted via text message has started to make an appearance. The same cautionary rules apply as I've listed above.

Signs you could be a target

Because we know for sure what the IRS and its representatives will and will not do, here are six signs that the person you're talking with on the phone, getting texted by, or reading an email from is a scammer, and not a legitimate tax collector.

1. You're instructed to pay a balance you owe right away.

2. You're told to load money onto a prepaid debit card.

3. You never received any prior communication from the IRS through the mail.

4. You're looking at a website that doesn't begin with irs.gov that's asking you for sensitive information, or demanding that you pay taxes you owe.

5. You're expected to read your credit card number or other sensitive information over the phone.

6. You're told you have no way to challenge the amount you owe -- you just have to pay it.

7. You're told the police will come arrest and/or deport you if you don't cooperate.

What to do

If you get a call, email, or text, supposedly from an IRS representative, and you notice any of these warning signs, there's a good chance you're an intended victim of a tax scam. If you suspect a scam, hang up the phone immediately, and report the scam to the Treasury Inspector General for Tax Administration, which you can do online here. You can also report it to the Federal Trade Commission.

If you think you owe tax, or even if you know for a fact that you do, it's still important to be on the lookout for scammers. If you even think the person you're talking to might be a scammer, hang up and call the actual IRS at 800-829-1040. There's no tax matter that can't wait for a few minutes, and you'll at least have the peace of mind of knowing you're talking to legitimate IRS representatives.

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