The IRS does not call anyone with threats of arrest, but financial fears are the driving force behind the latest trend in scams.

“No matter how much they feed off your fear, they never call,” said Ann Ruward, Senior Tax Adviser 5 with H & R Block in Powell. “Some of the stories are very scary.”

The IRS scam is the newest trend for scams both regionally and nationally — topping the Better Business Bureau’s list of top scams for 2015.

“It is No. 1 because everyone files tax returns for the most part,” said Stephen Thomas, CPA at James B. Seckman in Powell.

At just the Powell branch of H & R Block alone, there were 12 identity theft cases out of 2,000 tax returns filed at that particular office, Ruward said.

The Treasury Inspector General for Tax Administration received reports of about 736,000 scam contacts since October 2013, according to the IRS. Nearly 4,550 victims have collectively paid over $23 million as a result of the scam.

Identity theft cases as a whole cost the IRS $5.8 billion in 2013, according to the U.S. Government Accountability Office. That same year, $24.2 billion was recovered in identity theft cases.

“Out of that percentage, they made a lot of money,” Ruward said, noting she first saw cases like this last year and expects to see more.

This type of problem didn’t exist when Thomas started 14 years ago, but it is becoming more prevalent, he said.

“They capitalize on fear,” Thomas said, adding that even informed people can be scammed. “Something in them causes them to lock up and forget. The IRS does not come and break your legs or throw you in jail.”

If money is owed, notices will come in the mail and people usually already know they owe on their taxes, Thomas said.

“It is amazing the amount of resources people will put into making money in a way that isn’t ethical or right,” Thomas said.

Local victim shares his experience

In the Big Horn Basin, Josh Sorenson was scammed out of $1,900 earlier this month.

Sorenson received a message from someone claiming to be with the U.S. Treasury Department and that he was being cited for tax fraud, he said.

“It is really sad because everyone has a fear of the IRS,” Ruward said. “They hit the panic button right away.”

The calls typically begin with the first person being nice, and then the “manager” is brought in with threats of arrest if payment isn’t made immediately, Ruward said. 

“Just because they sound professional doesn’t mean they are,” said Powell Police Chief Roy Eckerdt.

The caller was “very to the point and serious,” and told Sorenson not to interrupt, he said. The caller said letters were sent to Sorenson’s previous addresses and then threatened him with arrest, he said.

“I was like ‘oh (explicative), I am going to jail,’” Sorenson said.

In some cases, the scam call may function like a 900 number, charging the person for every minute kept on the phone, Eckerdt said. In Sorenson’s case, it was six hours on the phone.

Sorenson said he was told if the call was lost, the warrant would stand. But, that’s not how it really works if someone was committing tax fraud, Eckerdt said. The IRS goes through a civil process and all legitimate agencies provide a number to call back.  

“They don’t just show up and arrest you for taxes or owing money on bills,” Eckerdt said, adding the same is true for scams involving bill collections.

“They wanted a non-federal way to send them money,” Sorenson said, adding he was kept on the phone while at the bank obtaining the funds. Every 30-60 seconds, he had to say he was still on the line.

The caller asked Sorenson to send his money order to Chris Marco in Riverside, California, with a specific number on it.

“I thought it was weird to have someone else’s number,” Sorenson said, adding that he was guided through what to say when questioned about his large transactions going to an undisclosed account.

Scams will ask for payment with pre-paid Visa cards or similar methods, but federal agencies accept checks, Eckerdt said.

“If they spent this much energy doing a real job, they would be successful,” Ruward said.

After the ordeal was over, Sorenson researched his experience.

“I went ‘oh my God, I just got (explicative) scammed,” Sorenson said, so he called the Powell and Greybull police departments, his bank, lawyer and MoneyGram.

Now he is concerned his identity has been stolen, complete with his Social Security number and passport information, he said.

Protection tips

Accountants are available to help fill out a form for identity theft claims, Thomas said. Once completed, the form sends the tax return to a higher level of scrutiny.

The only way the IRS will ever contact anyone is through U.S. Postal Service mail and their letters will have phone numbers for the person to call. But sometimes those letters are fake, so Ruward and Thomas recommended contacting an accountant to verify the letter’s authenticity.

The IRS never asks for Social Security numbers, they already have those on file. They also will never ask for bank account information, Ruward said.

Ruward recommended running frequent credit reports to watch for any irregularities. If anything happens, file a police report.

“It gives you more of a leg to stand on with credit report agencies,” Ruward said.

Tax identity theft is also used so people can work in the United States illegally, Thomas said. When this happens, victims receive W2 forms for jobs they never held.

Sometimes IRS tax scams don’t even involve a phone call. Another similar scam involves filing tax returns under someone else’s identity so that the rightful owner of the tax return is unable to get their refund.

“It is the hardest thing for the IRS to catch, because they use PO boxes and it takes time for the IRS’ system to catch up with W2 amounts,” Ruward said.

A preventative measure is to use a PIN number received in the mail directly from the IRS – making it impossible to file taxes electronically without that set of numbers.

H & R Block offers an identity shield program in partnership with the IRS, Ruward said.

When a fraud occurs, it can take 12 weeks or more to get a letter back from the IRS saying it’s being worked on, Ruward said. From there, it can take an additional eight months before the tax return arrives.

“They are behind the times because this should have been on the forefront 10 years ago,” Thomas said.

Budget and staffing cuts in recent years have hindered the IRS’ ability to address the growing issue of tax scams, Thomas said.

“It is difficult when the IRS and Federal Audit Clearing House can’t protect their own websites,” Thomas said in reference to data breaches at both governmental and private businesses over the years.