Every year scammers posing as the IRS attempt to scare taxpayers into handing over money that they do not owe or money that will never go to reduce their tax obligations. Recently, the IRS warned the public of the newest twist on a common tax scam. It is important to understand how to identify a tax scam to help prevent yourself from being taken advantage.

Details of This IRS Scam

According to the IRS, a fraudster will contact a taxpayer, identify himself or herself as an IRS employee, and demand to be paid immediately. The scammer will only accept payment through a prepaid debit card, which the scammer claims is connected to the Electronic Federal Tax Payment System (or EFTPS).

The IRS recently announced that it will begin contacting people regarding back taxes through private debt collection agencies. However, these private collection agencies will only be used for limited types of cases. However, with any entity that tells you it is working on behalf of the IRS, it is still wise to question the contact's validity—many people claim they are “working on behalf of the IRS” as part of an IRS scam.

Still, with this new change, there are ways to protect yourself if you are contacted by a legitimate private debt collector.

Details of the Initiative Using Private Debt Collectors 

Scammers have long pretended to be the IRS in order to prey on taxpayers in the hopes of scaring them into paying hundreds or thousands of dollars. In reaction to this, the IRS warns consumers of these scams, which take on many forms. 

Recently, there has been an uptick in IRS scams coming from India. One 29-year-old woman, who ultimately gave into the scammer’s request for money, said that the person who called her had a foreign accent and confused basic English phrases. 

Twice in the conversation, the scam victim said the person on the phone said she owed 1,000 rupees, which is the currency used in India. Both times he corrected himself and said she owed $1,000.