Each year, thousands of taxpayers are tricked into giving their financial information to scammers.
According to a report from the US Treasury Inspector General for Tax Administration (TIGTA), victims have paid more than $50 million to scammers since October 2013. The average each victim loses individually? Close to $5,200.
Most IRS scams begin as persistent phone calls or emails from people who pose as IRS agents. They say that the victim has been audited and that they owe them money. They stress that they must be paid immediately and ask for money wires or gift cards. If not paid quickly, they threaten retaliation from the local police.
Scammers are getting more clever, persistent, and are even operating while overseas.
This past fall, US federal agents arrested more than 20 people in India who were involved in scamming Americans. One man lost more than $25,000 by being tricked into withdrawing money for the fake IRS officer.
Some of these scammers are targeting students or recent graduates to pay the “federal student tax,” which doesn’t even exist. Others send fake notices related to the Affordable Care Act and uses the overall confusing nature of the law to trick people out of money.
The most targeted group of people? The elderly.
Chris Devroy, 76, of Michigan was almost tricked out of $2,500 until a store clerk at a Family Dollar intervened. An elderly man from California made news when he withdrew more than $5,000 for IRS scammers.
As someone whose grandparents have experienced threatening phone calls, they would come frequently and sounded very real. Scammers said that my grandparents owed them money and wanted it in iTunes gift cards. To top it all off, they even wanted the routing number to their checking account. Fortunately, other family members were around and stepped in to make sure they their accounts weren’t drained.
In November of last year, the Government Accountability Office (GAO) released a report saying that the IRS estimated that it prevented $22.5 billion in attempted tax fraud. However, they paid $3.1 billion in fake refunds in 2014. The GAO believes that those estimates could be understated and that the IRS has to do more to protect taxpayer information.
Unfortunately for taxpayers, this increase in scams comes at a time when the IRS is the weakest it’s been in more than five years. According to the Center on Budget and Policy Priorities, the agency’s budget has been decreased by 17 percent since 2010, losing almost 12,000 employees in that time.
So what are we to do if the IRS can’t seem to protect Americans from fraud?
First, share with friends and family (especially those who are older) that the IRS will never contact them by phone or email. Second, support the Tax Revolution Institute in demanding accountability and transparency from the IRS. This will go a long way in easing much of the fear and confusion that has allowed these scams to thrive.