Lessons Learned from a Busted IRS Scam

Police in a suburb of Mumbai, India arrested 70 people this week who worked at a call center that allegedly employed 700 people to impersonate U.S. tax officials to scare Americans into paying millions to avoid arrest and fake fines.

The authorities allege the individuals arrested managed nine call centers where employees posed as Internal Revenue Service officials and made calls to Americans through the night, accusing them of not paying their taxes and threatening them with jail time and financial ruin if they refused to pay up. The local police estimated the business was making over $150,000 a night.

According to the Inspector General for Tax Administration, over the last three years alone the U.S. Treasury has fielded over 1.7 million complaints from victims who claim to have lost over $47 million in IRS scams.

Indian police from Thane, the suburb bordering Mumbai, shared a few recordings of the calls, which followed a long and complicated script that instructed the victims to nearby stores to buy $500 Apple gift cards. The victims were then told to share the gift cards’ registration numbers to give control of the cash to the call center worker.

To avoid falling into this trap, here are some of the tricks used in the scammers’ script.

1. Shower the target with harsh punishments

The callers told the targets the maximum sentence was five years and the maximum fine was $100,000. They also said their 401k, wages and benefits would be frozen, passport and state ID seized, and social security number would be blocked from receiving benefits including disability and unemployment benefits, child protection income, and retirement or pension income.

2. Tell the target resistance is futile

They told the victims that while they could try to hire a good criminal attorney, it would cost $25,000 to $30,000 in attorney fees, and it would be much easier to settle out of court. Not cooperating, they warned, would result in officers showing up at the door with an arrest warrant within 45 minutes.

3. Don’t let the target hang up until they pay up

The callers told the victims that if the call got disconnected, the “resolvement option would be canceled.”

4. Use official sounding names

The Electronic Federal Tax Payment System was actually just an iTunes gift card. A Government Affiliated Store was actually a Walgreens, Best Buy, or Target.

5. Repeatedly tell the targets they are being recorded

The callers claimed the lines were being recorded and monitored by the IRS and jury members and told them not to interrupt.

6. Threaten to use the media

Threats were made to notify national news channels, newspapers, and radio outlets of the crime committed against the IRS if the target refused to cooperate.

7. Call for a higher up

The initial caller would often “transfer” the call to a “senior Treasury officer” while providing bogus names and badge ID numbers.

8. Don’t tell anyone

The callers would tell victims they were not entitled to discuss the confidential information with any third parties until the “issue is resolved.”

Beware of scammers who use shady tactics to try to extract money or information from you. To make sure you are safe, consider using a professional tax expert who understands all the applicable state and federal regulations.

Estate Planning & Tax Preparation with Cohen & Burnett

For over 25 years, Cohen & Burnett has provided Washington, DC area residents with Tax Strategies and Estate Planning and Implementation. For more information on our firm and our broad base of experience, please visit our homepage today.



Receive the latest trends, news and resources on estate planning and asset management directly to your inbox.