No matter which country you live in, tax impersonation scams all follow the same script.
If you are in Britain, the phone rings and the person on the other end says he’s calling from HM Revenue and Customs (HMRC). In the United States he’ll say he’s from the Internal Revenue Service (IRS), or increasingly from the Social Security Administration (SSA). Or the state income tax authority. Perhaps even from a county or municipal government. In Canada it’s the Canada Revenue Agency (CRA) and in Australia the Australian Taxation Office (ATO). But whatever the country is, these are tax impersonation scams.
Wherever you live and whatever the relevant tax collection authority is called, tax impersonation scams are all the same. The voice on the other end of the phone will inform you that a review of your file found that you owe the government a lot of money. Back taxes you never paid, they’ll claim, plus interest. And if you don’t pay up within a day or two they’ll send agents (or a constable, police or sheriff) to your home to arrest you.
They’ll be stern but polite and will even give you their names (all fake) and employee numbers (also fake). That makes it sound even more convincing. And to illustrate how heartless these scammers are and how advanced their technological sophistication is, some use video relay services (VRS) to try to target the deaf and hard of hearing.
Paying Isn’t the End of It
Of course, you don’t expect such news out of the blue. Naturally, you’re fearful of facing arrest and then having to pay a solicitor to get you out of jail. So your instinct will be to agree to cough up the money. But if you do so, the caller will spring another surprise. Because of your arrears, you cannot pay by credit card or send a personal cheque. You can only pay by wire transfer. The caller then gives you the bank account number into which you have to transfer the money. So, the next morning you go to your bank and arrange for the transfer. The bank debits the money from your personal bank account and presto, the wire goes out.
There’s another alternative that provides an excellent chance for the scammer to avoid detection. That’s by demanding payment using a gift card (yes, you read that right), a prepaid debit card, bitcoin, or by making a cash deposit into a bitcoin ATM at your local convenience store.
Either way, it’s all a scam. If it’s a wire transfer, gift card or prepaid debit card it may be impossible to trace. If the bank wire can be traced, the bank account may prove to have been registered under an alias. The bank is also probably in a foreign country. If it’s in bitcoin, you can trace it to the end, but retrieving it may require filing a police report or even a court case.
If they don’t make a mistake, scammers can literally walk away with your money. Luckily, some of them do make mistakes.
Catching Up with Tax Impersonation Scam Operators
In 2018, 21 conspirators received sentences of to up to 20 years imprisonment each for conspiracy. They ran a massive IRS scam from 2013 and 2016. More than 15,000 people lost hundreds of millions of dollars in the scam. The scammers laundered the money their victims paid them through call centres in India. From India it was re-routed back to the ringleaders in eight different U.S. states. The number of victims could have been significantly higher, since the scammers had in their possession the personal information of more than 50,000 people.
As mentioned above, in the U.S., tax impersonation scams are quickly migrating from the IRS to the SSA. By mid-2019, the Federal Trade Commission (FTC) received almost 73,000 complaints from Social Security cardholders regarding Social Security impostors. Their reported losses totalled $16.94 million. Those 73,000 complaints compare with just 39,119 in all of 2018 year. And a mere 3,065 in 2017. As a result of the growth in Social Security scams, the SSA has launched a dedicated online form for the public to file reports.
One particularly tragic case involved a Chicago nurse, whose husband was suffering from cancer, was suckered into a Social Security scam through a robocall. The scammer, who was calling from an Indian call centre, told her that her Social Security number was being used by another party for illegal purposes. To protect the rest of her savings — which amounted to almost $340,000 — he instructed her to transfer them to a new Social Security account. Of course, the bank account numbers the scammer gave her — one of which was in a Panamanian bank — belonged to his outfit, not the SSA. The FBI and New York Police Department assisted her in recovering a mere 8 percent of her losses.
Taxpayers in Every Country Can Be Hit
In November 2018, tax scammers fleeced over AU$800,000 from Australian taxpayers. The ATO received more than 37,000 phishing attempts that month alone. And from 2013 to 2018, Canadians lost over CDN$10 million to tax scammers. During that time consumers reported to the CRA that they received some 60,000 phone calls from tax scammers.
For the record, the IRS will never call any taxpayer to demand payment of back taxes. They will only contact you by mail. Therefore, all such phone calls you get are, by definition, tax impersonation scams.
If you think you’ve been the victim of a tax impersonation scam, contact the fund recovery experts at MyChargeBack.