The Latest Holiday Scam – Gift Cards and Taxes

There are nice people who work for the IRS – pretty much a thankless job.  And, they would love to receive acknowledgment for their efforts, but let’s face it – if you were to receive a call from someone claiming to be from the IRS and telling you that you owe taxes which can be paid by way of a gift card, what would you think?  Hopefully, your immediate reaction would be that it is a scam.  How practical would it be for the IRS to receive a gift card from a retailer to credit to your tax obligation? 

Yep, it is happening – scammers are targeting taxpayers by asking them to pay a fake tax bill with gift cards. They may also use a compromised email account to send emails requesting gift card purchases for friends, family or co-workers. Gift cards make great presents for loved ones, but they cannot be used to pay taxes.

Here’s how this scam usually happens:

  • The most common way scammers request gift cards is over the phone through a government impersonation scam. However, they will also request gift cards by sending a text message, email or through social media.
  • A scammer posing as an IRS agent will call the taxpayer or leave a voicemail with a callback number, informing the taxpayer that they are linked to some criminal activity. For example, the scammer will tell the taxpayer that their identity has been stolen and used to open fake bank accounts.
  • The scammer will threaten or harass the taxpayer by telling them that they must pay a fictitious tax penalty.
  • The scammer instructs the taxpayer to buy gift cards from various stores.
  • Once the taxpayer buys the gift cards, the scammer will ask the taxpayer to provide the gift card number and PIN.

Here’s how taxpayers can tell if it’s really the IRS calling. The IRS will never:

  • Call to demand immediate payment using a specific payment method such as a gift card, prepaid debit card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
  • 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.
  • Threaten to revoke the taxpayer’s driver’s license, business licenses or immigration status.

Any taxpayer who believes they’ve been targeted by a scammer should:

  • Contact the Treasury Inspector General for Tax Administration to report a phone scam. Use the IRS Impersonation Scam Reporting webpage or call 800-366-4484.
  • Report phone scams to the Federal Trade Commission. Use the FTC Complaint Assistant on FTC.gov. Add “IRS phone scam” in the notes.
  • Report threatening or harassing telephone calls claiming to be from the IRS to phishing@irs.gov. Include “IRS phone scam” in the subject line.
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About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Fiduciary Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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