Gift cards are great presents for family and friends. There's no worrying about sizes or misinterpreted wish list hints.
Gift cards, however, are not an option to pay your taxes.
That fact hasn't stopped con artists. The Internal Revenue Service says tax scams involving the prepaid pieces of plastic presents are on the rise.
The tax agency says it has received many reports of taxpayers being asked to pay a fake tax bill through the purchase of gift cards.
Breaking down the con: The tax scammers tend to follow the same basic script, tweaking it as needed when marks get wise to their tactics.
Here's how one common tax gift card scenario goes:
- Someone posing as an IRS agent calls and informs the targeted taxpayer that his/her identity has been stolen.
- Even worse, according to the fake tax fake agent, the taxpayer's identity was used to open bogus bank accounts.
- The caller then tells the taxpayer to buy gift cards from various stores and wait for further instructions.
- The scammer then contacts the taxpayer again telling them to provide the gift cards' access numbers.
Scam victims are led to believe that the gift card money, now available to the scammer thanks to the access numbers provided, will go toward paying off a tax bill, presumably one that's been run up by the person who stole the taxpayer's identity.
In reality, though, the gift card money is going straight into the hands of the scammers who made up the stolen ID story.
Don't fall for fakers: Why are these schemes still around and apparently effective?
Because identity theft is pervasive. So is fear of being on the wrong side of the tax man.
Crooks combine these two terrifying situations and are able to convince a lot of folks that they need to act as quickly as possible to avoid even more dire consequences.
But don't rush into any apparent tax trouble remedy.
Stop, take a breath and remember the follow tips on how you can tell whether that IRS agent is real or a crook.
The IRS does not:
- Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer.
- Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
Note that in some cases, an IRS revenue agent could show up in person at your home or business. That's now happening in Wisconsin, Texas and Arkansas. But these types of compliance visits only happen if you've previously been contacted by the agency about a bill that you've put off paying for a while.
- Demand that taxpayers pay taxes without the opportunity to question or appeal the amount they owe. All taxpayers should be aware of their rights.
- Threaten to bring in local police, immigration officers or other law-enforcement to have the taxpayer arrested for not paying. Yes, this long-running scam tactic, the largest in IRS history and apparently growing, is still around.
- Revoke the taxpayer's driver's license, business licenses or immigration status. Just like the police involvement threat, these dire consequences are not part of the real IRS' collection practices.
Dealing with scammers: When you realize the caller is a tax scammer, hang up.
If you have any reason to believe that you do have an outstanding tax liability, contact the IRS directly yourself.
Chances are the agency already knows you owe. Even if it doesn't, you'll be better off by acknowledging your debtor status and taking proactive steps — an installment payment plan, for example — to resolve the matter sooner rather than later.
Contact the Treasury Inspector General for Tax Administration (TIGTA) to report the phone scam. The easiest way is to use TIGTA's IRS Impersonation Scam Reporting web page. If you prefer, you also can call toll-free (800) 366-4484.
Also report phone scams to the Federal Trade Commission (FTC). Again, Uncle Sam recommends using the online FTC Complaint Assistant. Be sure to add "IRS Telephone Scam" in the notes.
If the scam arrives via an unsolicited email claiming to be from the IRS or an agency-related component like the Electronic Federal Tax Payment System (EFTPS), report it to the IRS at email@example.com. In these cases, add "IRS Phone Scam" to the subject line.
Now that you're ready to fight those scammers, go ahead and fight the crowds doing some Black Friday shopping.
Or take the simpler retail route. Wait until the crowds clear next week and then pick up some of those gift cards to be used for good, as holiday gifts to your family and friends.
You also might find these items of interest:
- Look out for smishing tax identity thieves
- Seasonal jobs, taxes and employment scams, oh my!
- No, that is not the Taxpayer Advocate Service calling in latest IRS impersonation tax scam