Don’t Fall for the Student Tax Scam!

By | November 8, 2016

If you’ve got a child or grandchild in college, you know how expensive it can be. Now criminals are attempting to make it even more expensive with a relatively new scam targeting college students and their parents. The fraudsters are claiming to be IRS representatives or police and demanding that victims pay up for a bogus “Federal Student Tax.” While federal taxes are real, this particular tax is completely imaginary.

IRS Student Tax Scam AlertThe IRS has witnessed a sharp increase in this kind of crime and issued a warning to college students, taxpayers and their family members last May, advising them to be wary of anyone demanding payment for this or other common tax scams. IRS Commissioner John Koskinen reports, “These scams and schemes continue to evolve nationwide, and now they’re trying to trick students. Taxpayers should remain vigilant and not fall prey to these aggressive calls demanding immediate payment of a tax supposedly owed.”

Aggressive is the key word in this kind of crime, as sophisticated scammers have been known to spoof official phone numbers that give an air of legitimacy to the caller and frequently utilize threats and intimidation in their demands. They’ve often conducted enough research to have the full name, address and other identifying information about their targets, which can further add to the sense that they must be for real.

For law-abiding victims who are taken by surprise, it’s easy to be frightened at the alleged consequences and rush to comply, even if they feel that something’s not quite right. There are usually signs that can tip you off that the call isn’t legitimate, so it pays to know what the IRS will and will not do if the agency thinks you owe a tax debt. They’ll never demand payment by wire or using gift cards, for example, which are some of the favorite strategies of fraudsters because the funds cannot be traced. Remember the IRS will NEVER:

  • Demand immediate payment for a tax debt over the phone. The IRS will always write to you with a request for more information or a bill.
  • Threaten to arrest you or send police if you don’t pay what they demand. The IRS is the IRS. They have you right where they want you and have no need for mere cops.
  • Specify a particular kind of payment. Unlike scammers, the IRS will never require you to pay with a prepaid debit card or submit your credit or debit card number to them.
  • Call to verify your tax data on a call. Again, the IRS will contact you in writing if there are any concerns about your tax returns or identity.

Even if you’re pretty sure the caller isn’t telling the truth, it can be alarming to get a call like this. Remember to keep cool and don’t give out any personal information to unknown callers. Tell them you’ll be contacting your accountant and then hang up,  and if you’re the least bit concerned that it might really have been the IRS contacting you about an actual tax debt, you can always call them directly to find out: 1-800-829-1040. You can also report the call on the IRS Impersonation Scam Reporting web page or at 800-366-4484. If you’re feeling particularly public-spirited you can even file a consumer complaint with the Federal Trade Commission to let them know what’s going on.

Nobody enjoys paying taxes, and paying fake taxes to a bunch of crooks is even worse. Before you give out any personal information over the phone, get verification of who it is you’re talking to, and never, ever give financial data to people who contact you out of the blue. Anyone who has a legitimate demand for money from you, whether it’s the IRS, another government agency or a debt collector, will be more than happy to put it in writing and give you a reasonable amount of time to pay. Except for student loan debt collectors, of course…but that’s another topic.