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Tax scammers are waiting to take your money

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Release Date: March 25, 2008
Contact: 202-835-3323, This email address is being protected from spambots. You need JavaScript enabled to view it.

Washington, DC -- Tax-related scams are on the rise, according to consumer complaints tracked by the National Consumers League’s Fraud Center. Reports of tax scams from consumers nearly quadrupled in 2007 from the year before, and the trend seems to be continuing into 2008

“This time of year – and with the economy in the shape it’s currently in – crooks see vulnerable prey in consumers feeling the squeeze at tax time, said Sally Greenberg, Executive Director, National Consumers League. “Posing as IRS officials, these criminals pretend to be helping consumers claim a refund they’re due, but they’re really setting up a sting to steal consumers’ hard-earned cash. Consumers who are eager to get their refund faster may be vulnerable to these pitches.”

In the scam, which was first reported to NCL’s Fraud Center in April 2005, the two most common scenarios are both “Phishing” schemes: the victim receives a phone call from an “IRS employee” offering a tax refund – however, they need the taxpayer’s checking account number, he or she is told, in order to deposit the money.  Alternately, the victim gets an email claiming to be from the IRS – often with a realistic-looking sender address – stating that the consumer is due a refund and needs to click on a link and enter their personal financial information in order to have it processed.

“Our Fraud Center received close to 50 complaints in 2007, which we believe is just the tip of the iceberg, since many people don’t report these scams due to embarrassment,” said Greenberg. “Many consumers who do report have been too savvy to fall victim. However, with tax season upon us, and as scammers’ pitch continues to evolve, we’re cautioning consumers against falling for the bait.


Tips for Consumers:

  • Be immediately suspicious if someone claiming to be from the IRS or any other government agency contacts you.
  • Do not give out any personal information – legitimate government agencies will have a consumer’s contact information on file and should not need you to provide it.
  • Ask the caller to follow-up with you via regular mail, or hang up and call the agency’s phone number – obtained from a credible source, such as the official Web site or the government pages of your phone book.

Other tax-related scams reported to NCL’s Fraud Center include:

  • Offers to provide “tax relief,” or assistance with clearing or reducing tax payments consumers owe to the government.
  • Con artists claiming to be government representatives calling to initiate payment transfer of impending government tax “rebates” (Economic Stimulus Act of 2008 which will provide payments to more than 130 million American households)
  • Tax-filing services that file the return on behalf of the consumer but use different routing numbers to ensure that the refund never makes it to the consumer’s bank account.

Consumers should remember: the IRS does not use e-mail to initiate contact with taxpayers about issues related to their accounts. If a taxpayer has any doubt whether a contact from the IRS is authentic, the taxpayer should call the IRS customer service toll-free number (1-800-829-1040) to confirm it.

Stephen

Stephen was worried about the money he owed the IRS. He contacted a company that assured him he would be work with tax attorneys who would settle his debt. Stephen sent them his personal information and tax returns from previous years. One week later, the company said they couldn’t help Stephen, but wished him “luck”. When Stephen asked for a refund for the $9,500 fee he paid via credit card, the company hung up on him.  Stephen reported the scam to NCL’s Fraud Center, and is working with an attorney in hopes of recovering the money he lost.

“Pattie”

Pattie responded to a tax refund company’s advertisement – receive a tax refund directly deposited into one’s bank account within 8-11 days for only $99!  She provided her routing number when filling out the paperwork. The company told her that there was a delay but that her direct deposit was being processed. After following up with her bank, Pattie learned that the company had rerouted her deposit into their account – leaving her without a refund and helpless.

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About the National Consumers League
Founded in 1899, the National Consumers League is America’s pioneer consumer organization. Its mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. NCL is a private, nonprofit membership organization. For more information, visit www.nclnet.org.