An Analysis of the IRS Phone Call Scam: What to Expect in 2019

12,716 Americans Have Lost a Collective Amount of $63 Million. Don't be a Part of the Statistics

$63 million. That is the amount of money that has been lost through the IRS phone call scams since October 2013. That is according to the Treasury Inspector General for Tax Administration (TIGTA), an arm of the US federal government that ensures integrity in the administration of internal revenue laws.

It’s therefore not surprising that this scam takes the second spot in the “Dirty Dozen” list. A list that is compiled every year by the IRS highlighting the 12 most dangerous scams targeting the taxpayer. Phishing holds the top position.

In a news release dated March last year, the IRS Commissioner, Chuck Rettig, acknowledges the threat posed by these phone call scams but assures citizens that they are working collaboratively with their security summit partners to get to the head of it. He also warns individuals to be especially careful during the last months of the tax filing periods, Jan to April, since that is when scammers launch full-scale attacks.

And just to give more perspective to what the commissioner was saying, here is an analysis done by the experts at  allareacodes.com. This analysis compares the number of robocall complaints that have been filed by consumers during the last four months of the filing period for the past three years. We understand that this is not a direct reflection of the tax scam calls since it looks at the general complaints involving the “Do Not Call” registry but still, it’s not a coincidence that the surge is witnessed just when people are finishing up on their taxes.

According to this analysis, the number of complaints rises by 20% in the months of March and April compared to January.

Average Complaints by Month (2016-2018)

A further breakdown of these stats by weeks indicate that the number of complaints is 10% higher during the third week of April than during the last week of March.  Also compared to the whole month of January, this third week of April has 5x as much complains.

Average Complaint by Week (2016-2018)

How the IRS Phone Call Scam Works: Identifying the Scammers

The funny thing is that when you are first told about the scam it sounds so obvious that you wonder how anybody would fall for it. But these scammers execute is so clinically that you just end up sucked in it. They prey on your fear. Push you into a panic state so that you are no longer thinking logically.

But the “good” thing is that the scams seem to follow a certain script. Which makes it really easy to identify them as long as you are informed. And this is also why, as you will see later, one of the keys to stopping the scammers is educating the public.

How the IRS Impersonation Scam Works

The Initial Contact

There are two ways the fraudsters can reach out to you. In the first instance, they leave you a recorded message highlighting the amount that you owe the IRS in tax debt then they request that you get back to them immediately or else they will take legal action against you. And in the second method, they contact you directly.

Authentication

The criminals identify themselves using fake names and a fake badge number. Mostly they will use typical American names such as John Smith and Sarah Walker but this is subject to change. They also spoof the caller id so that it seems like you are getting a call from the IRS. They may even ask you to head over to the IRS website to check whether indeed that’s their phone number.

The scammers may also have the last 4 digits of your social security number which they use to further validate themselves.

Threats Begin

The scammers know all the right psychological buttons to push. Unlike the lottery scams that prey on people’s desire to gain money, the phone call tax scam capitalizes on your fear of loss and in this case, loss of your freedom. Which is why they threaten you with arrests or deportation for the immigrants. They may also threaten to revoke your working license or auction your car.

And to ensure the credibility of their narrative, they call you again but this time spoofing the numbers to impersonate the police or the motor vehicle company.

Another clever trick these fraudsters employ to ensure the success of their scam is to completely isolate you. They threaten you against ending the call and insist that you stay in constant communication with them throughout the whole process. This is meant to deny you the chance to question what’s going on.

Because by giving you some breathing space, you will start noticing the cracks in the story. Like how you are receiving a call from 911 when it’s just an SOS number. Yes, in case you didn’t know, even in the rare event that the police decide to call you it would never appear as 911 on your caller id.

Closing the deal

In most cases, these scammers never request that you make your tax debt payment. They just push you through threats until you are the one suggesting it. Quite a smart move if you ask me.

Note that during the period of the call the scammers will connect you to different people that you need to talk to as they try to simulate the different departments in the IRS. At the final stage, you will be talking to their closer who guides you on how to make the payments. This mostly involves wire transfers, debit card payments or gift cards.

One thing that stands out in these criminals is their confidence. And as any sales and marketing expert will tell you confidence is the key to making any deal. Which in essence is what these scammers are doing.

So far everything we have said would sound legit to anybody, right? From the caller id to the names, badge number, and even their knowledge of your personal information like your social security number. So, how can you be sure that it’s not the IRS that’s calling? Simple.

These are the Signs that you are not Talking to the Real IRS

Warning Signs

IRS will never call you directly on your home line demanding that you pay your taxes. At least not before they have sent you several mails highlighting the same. And I am talking about the snail mail that is delivered by the United States Postal Service.

The IRS will not threaten to send local police to arrest you and neither will they threaten to deport you. That is stooping too low and the IRS would rather go big or go home. So what they can do in the most extreme case is to freeze and seize the money in your bank accounts. I say extreme because you will have received plenty of notices before that happens.

The IRS does not demand immediate payments. That would be against the taxpayer’s bill of rights which states that you have the right to question and appeal the amount stated as your tax debt.

The IRS will never email you requesting for tax debt payment. Remember, snail mail!

The IRS will also never demand that you surrender your personal financial information through the phone. So if the caller is demanding that you give them your debit card number/password then it’s definitely a scam. End the call immediately.

What to do When you get an IRS Imposter Phone Call

How to Handle IRS Impersonators

So now you know how to identify an imposter but how do you react? Of course, the important thing is that you immediately terminate the call and not give the callers any personal information. If you are sure that you owe the IRS tax money then we recommend that you first call them using their official number, 800-829-1040. This will help you end any doubts you may have regarding the authenticity of the phone call.

Once that is done, you can now proceed to report the call which will help the government in its fight against the phone call scams. There are two ways you can do this.

The first involves reporting the phone call to TIGTA. They have an online form where you fill out the details describing how the phone call took place.

And the other option involves filing a complaint with the Federal Trade Commission (FTC). A body mandated with protecting US consumers.

Reporting these scammers will be crucial in helping these agencies keep up with the scam’s trend. This way they can know if they are winning in this fight or whether to scale up the battle.

To report a scam email then forward it to phishing@irs.gov. And although this feels like common knowledge, never open any attachment included in the emails.

Looking at the IRS Phone Call Scam Using Actual Numbers

People don’t realize just how serious this scam is until they have seen the actual statistics. And you know what? Everybody is a target regardless of which state you are in. But as you will see some states are more targeted than others.

Nevada has the most scam reports with 2,579 people out of every 100,000 people filing a complaint. In California, 1,891 complaints have been filed for every 100,000 people. Texas sits at number 39 on the list with 1,421 complaints. Here is a full break down of scam complaints per each state.

Distribution of the Phone Call Scam in the US (Heat map)
Distribution of the Phone Call Scam in the US (Barchart)

What the government and involved bodies are doing regarding the tax scam

If there is one thing that is clear up to this point is that the phone call scam thrives on ignorance. The main reason why people are being defrauded is that they lack adequate information regarding the topic. Which is, therefore, not surprising that the main go-to strategy in curbing the scam is public awareness campaigns.

Each year, the IRS launches an awareness campaign in which they educate the public about the 12 most rampant tax scams in their “Dirty Dozen” list.

The IRS together with TIGTA and FTC are also collaborating with the media, Congress and other stakeholders to ensure that as many citizens as possible are reached. They are also working with the telephone companies to close down any number reported to be engaging in this fraud.

Also in a more practical approach, the government has arrested several people involved in the scams and in so doing, managed to take down a number of call centers. Surprisingly, most of these call centers are located outside the country where they cannot be tracked down by the government.

India is the biggest culprit accounting for the majority of the scams. It has been reported that Indian call centers are involved in more than one in ten complains of frauds in the UK. Just last year, 21 individual from different states in the US were arrested and accused of conspiring with 32 other individuals in Indian call centers to defraud about 15,000 American taxpayers off their money.

So the next time you find yourself wondering why the IRS seems to be employing only Indians it just maybe because it’s a scam. Especially when they introduce themselves as John Smith.

Steps You Can Take as an Individual to Avoid Getting Scammed

Even as we wait for the government’s intervention you can also take certain measures to ensure you don’t fall for these scams. What am I talking about?

Familiarize yourself with the taxpayer’s bill of rights. Because if you did, then you would know that the taxpayer has a right to Challenge the IRS’s position and be heard. Then you would not be scared when the scammers call demanding that you make immediate payments or else you will be arrested.

Another trick you can employ is the use of an autoresponder that will respond to the IRS scam phone calls notifying the scammers that what they are doing is a crime. Sounds cheesy but it works. Especially since engaging with the cons increases their chances of luring you into their trap.

To stay safe from phishing emails, use a security software such as an antivirus and anti-malware and encrypt sensitive data that you store on your computer. The software can also be used to secure your connection when conducting online transactions to avoid cybercriminals from capturing your financial information.

New Scamming Techniques

The scammers know that to survive they need to evolve. And so with the massive campaigns ongoing to educate the mass about their misdeeds what do they do? They change tactics. Come up with new techniques to swindle unsuspecting citizens. Unfortunately, until complaints about a particular scam have been filed its hard to tell what they will do next. But here are some new approaches that they have been employing.

Posing as IRS Officers who want to help you complete the tax filing process

This technique will be particularly effective during this time as we approach the end of the tax filing period. The scammers call or email you claiming that they have received your file returns but need to do some verifications before completing the process.

IRS Email phishing

They then to request that you give them your social security number and other financial information like credit card number. Be warned. The IRS will never call requesting that you give out this kind of information. The scammers intend to use this information to file fraudulent returns and claim the refund.

Targeting Tax Professionals instead of individual

In another twist, the scammers are shifting their target to tax professionals. This scam involves sending an email to the tax preparers attempting to steal their usernames and passwords. The scammers pose as state accounting or professional associations and include links in the emails to capture the login details.

This scam is quite dangerous because if successful, the scammers will have access to the financial information of all the tax professional’s clients. According to the IRS, the cybercriminals have specifically targeted professionals from Lowa, Illinois, New Jersey, and North Carolina. To avoid these scams, tax preparers are advised to visit the official sites for these associations instead of opening the links included in the emails.

Scammers Impersonating Taxpayer Advocate Service (TAS)

Scammers have also adopted a new technique where they are calling their intended victims claiming to be TAS, an independent organization within IRS that helps in resolving problems between the taxpayer and IRS.

These scammers spoof the numbers of the TAS offices in Houston/Brooklyn and proceed to request for your personal information including your Social Security number and Individual Taxpayer Identification Number (ITIN).

This is the point where I tell you that TAS will never initiate contact with the taxpayer. You contact them when you need help resolving an IRS problem.

Scammers Impersonating Company Employees

This is another dangerous technique that targets many people at once. The scammers impersonate company employees mostly executives and email the human resource or payroll staff requesting that they be sent the organization’s form w-2 which contains the financial information of all the employees.

Employee Impersonation

Or in a more direct approach, the scammers direct the payroll officers to change the deposit account for payroll purpose then proceed to give them a new account and routing number owned by the scammers. These are the kind of emails that should be forwarded to phishing@irs.gov.

Using Video Relay Services to target people with hearing problems

The scammers have also adopted a new technique in which they are targeting people with hearing problems by calling them through the Video Relay Service. A common assumption is that all VRS calls are legit because there is someone interpreting the message.

IRS Video Relay Services scam

But the truth is that the VRS interpreters do not screen the calls for validity which means scammers can as easily get to you through this system.

Conclusion: What to Expect in 2019

2019 seems like it will be a good year. Not for the scammers but for the government and its citizens. Turns out, the numerous mass outreach campaigns are working.  Reports indicate that a while ago, the scammers were able to get a victim for every 40-50 calls made. How about now? Well, now they have to make 300-400 calls before they have a victim.

Therefore, one thing you can expect this year is an increase in the number of phone calls made every day as the scammers try to ensnare more victims into their scam web. But even that will prove less and less fruitful as the public continues to be educated on these scams.

The other thing you can expect is a change in the methodology of the scammers. Unfortunately, there is no way to know what they will do next. But one important thing you should always keep in mind is that the IRS will never call or email you directly without sending you a mail. Familiarising yourself with the taxpayer rights will also enable you to have a legal ground to fight off the scammers.

So then, can we expect a time in future when the scammers won’t be able to land a victim? Never say never but in my opinion, that is highly unlikely. Fear is their weapon. And if pushed long enough anybody will break. Regardless of how sure you are its a scam, there is always that little fear. What if it’s not. And that is how they will get the occasional victim.

Also, the fact that they will be changing tactics means you can easily find yourself entangled in a new scam. However, the ultimate goal is to minimize the level of menace cast by these scams and I would say that is slowly being achieved.

Marijan Hassan
Marijan Hassan holds a BSc degree in Mathematics and Computer Science and over the past few years he has developed interest in Cyber Security. He is currently focusing on the threats the Tech Industry brings with it for a basic consumer.