Senate Probes Rise in Tax Scams

The Senate is probing the recent rise in tax scams — particularly those targeting senior citizens that find themselves especially vulnerable to callers impersonating Internal Revenue Service employees — and are looking for solutions to stop these fraudulent behaviors in their tracks.

Timothy P. Camus, deputy inspector general for investigations at the Treasury Inspector General for Tax Administration, said they receive between 9,000 and 12,000 reports about such scams every week, as noted in Accounting Today.

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The scam apparently begins with a call from someone pretending to be from the IRS. These criminals tell victims that they owe money to the IRS and demand that the victims pay the money immediately through a temporary debit card or a wire transfer. If the victim refuses to pay, he or she is then threatened with arrest, deportation or suspension of a business or driver's license. Often, the caller becomes very insulting, according to victims' reports.

In one of the most severe cases, Camus, in his prepared testimony before the Senate Finance Committee, mentioned a letter provided by a member of the committee about the tragic death of a constituent's father after receiving several threatening calls from a scammer demanding money and pretending to be from the IRS.

As of March 9, 2015, more than 3,052 people have become victims of the scam, shelling out a total of $15.5 million, or about $5,000 per victim. One individual reported a loss as astronomical as $500,000. Nearly 300 victims also provided personal identity information to fraudsters that could put them at greater risk for identity theft.

The scam, now part of a multi-agency investigation, is striking from multiple sources and impacting people in many states. As of Feb. 28, 2015, the top three states in terms of total dollar losses by victims of the scam were California ($3,840,000), New York ($1,352,732) and Texas ($795,884). Florida and Virginia followed behind at $760,000 and $648,363 in damages, respectively.

Officials encourage residents to immediately hang up the phone if they ever receive a call from someone claiming to be from the IRS.

Camus indicated that the office is currently investigating some of the individuals who processed money tied to the scam, and recently arrested two suspects.

This scam is just one in a series of increased tax-related fraud this year. TurboTax temporarily halted filing state returns after a spike in fraudulent filings, and many states, including Vermont and Alabama, have issued warnings about tax scams.

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