What is the Tax Scam and how can you avoid falling victim?

(Photo: WKRN)

NASHVILLE, Tenn. (WKRN) – In 2014, 2015, and 2016, the top scam reported to the Better Business Bureau was the “Tax Scam.”

Scammers contact unsuspecting victims, usually via phone, and tell them they owe money to the government.

The victims are told that if they do not pay the money immediately, they will be arrested.

According to the IRS, between October 2013 and April 2017, 174 Tennesseans lost more than $800,000 when they became victims to this type of scam.

Kevin Walters with the Tennessee Department of Commerce and Insurance said, “The way that an IRS tax scam works is that a scammer will pose as an IRS representative, and well before they call you, they will have acquired your name, your phone number, some bit of personal information about you. They will threaten you with arrest, threaten you with legal action, if you do not give them money for an unpaid federal tax bill.”

Walters says the scammer will demand payment through wire transfers, prepaid debit cards and gift cards, such as iTunes cards.

Requests for payments through these means are red flags.

Another common tactic by tax scammers is to threaten to arrest the would-be victim. According to the IRS’s website, department officials will not “threaten to bring in local police, immigration officers or other law-enforcement to have you arrested for not paying.”

Walters also says the IRS will always initiate contact via mail.

“We know from past experience that the IRS always sends a letter. They send you a notification by mail.”

He continued, “If you’re dealing with a scammer, you should hang up the phone. If someone’s calling you and threatening you, it’s okay to be rude to a scammer. Hang up the phone and walk away. Don’t give them any of your information. Don’t give them any money, and you should call a law enforcement agency as quickly as possible.”

To report a tax scam, contact the Department of Treasury or the Federal Trade Commission.

Click here for more information about tax scams, and read about how to know if the IRS is actually contacting you.

Valid ways of paying the IRS can be found on their website.