Consumer Reports reveals how to not become victim of tax scams

Friday, March 4, 2016

You have less than two months until the tax day deadline, which is April 18 this year, but be aware of the many schemes out there.

SAN FRANCISCO (KGO) -- You have less than two months until the tax day deadline, which is April 18 this year, but be aware of the many schemes out there.

Scammers are using clever ways to scare you into handing over your money. Hundreds of thousands of people have been targeted in the past few years.

Consumer Reports reveals how to spot a scam so you don't become a victim.

Alex Gutierrez's nightmare started with a phone call allegedly from an IRS official. He was told his tax refund was a mistake and he had to return it that day or else. "If I didn't send the money, they were going to cut me all my rights, I can't travel, I can't use my money in the bank," he said.

He panicked and wired $700 to a scam artist in Peru before he realized he'd been had.

The U.S. Treasury Department said that this scam has been perpetrated in just about every state, and estimates that thousands of people have been defrauded of more than $26 million," Consumer Reports Chief Money Editor Margot Gilman said.

It can happen to anyone. A threatening message left on the home phone of a Consumer Reports employee said: "I'm calling regarding an enforcement action executed by the U.S. Treasury."

When she called back, she was told she could avoid arrest by immediately wiring more than $6,000 to clear her record. The man on the call said: "You need to go to the bank first, you need to withdraw the money in cash."

When she balked, he threatened her by saying: "We'll send the officers and you'll be arrested."

"It's critical to know the IRS never calls out of the blue. If you have a tax problem, you'll almost always first be contacted by mail," Gilman said.

Other things the IRS will never do is demand immediate payment, threaten imminent arrest or other enforcement action, require a specific payment method like a prepaid debit card or request confidential information on the phone.

Gutierrez said getting that call was very scary, but he knows now how to spot a scam.

Consumer Reports is published by Consumers Union. Both Consumer Reports and Consumers Union are not-for-profit organizations that accept no advertising. Neither has any commercial relationship with any advertiser or sponsor on this site.