Allen Abrams was stunned recently to get a phone call from someone who sounded like a legitimate IRS agent. He demanded a $5,000 tax payment within the hour or else...
"I would be handcuffed and thrown in jail. It was absolutely the most terrifying thing I have experienced that I can remember," said Abrams.
This type of brazen attempted fraud has happened in nearly every state.
Consumer Reports says the first red flag was the phone call. The IRS typically contacts you first by mail, not on the phone.
"Still, the imposters can be quite convincing. They often use phony names and IRS badge numbers. They even enlist accomplices who claim to be the police," said Tobie Stanger with Consumer Reports.
Another type of scam can come through texts and emails, which demand confidential information claimed to be missing from your tax return.
"These so-called phishing schemes are aimed at getting important information like your Social Security number. That way, the scam artist can steal your identity, and then they can claim your refund using a fraudulent tax return," said Stanger.
The IRS does not ask for personal information by email or text, so these too are red flags.
"If you think you have gotten an email phishing for confidential information, send it to email@example.com. And if you get a suspicious phone call, report the incident to the authorities," said Stanger.
It may also be appropriate to alert the FBI. That's what Allen did after his accountant warned him the phone call was probably a scam.
If you're hiring a tax preparer, don't fall for too-good to-be-true promises about big refunds or penalty reductions. Look for preparers who will sign your tax return themselves, as well as provide a Preparer Tax ID number. And never allow a refund to go into the preparer's account. It should always be sent to you.