… and police are on their way to your house to arrest you

By Sam Brunson

Over the last couple weeks I’ve gotten at least three calls from numbers I’m not familiar with. When I pick up, a heavily-accented recorded voice tells me that I haven’t paid my taxes, the IRS has filed a lawsuit (or, in one recording, a “law-sweet”) against me, and that police are on their way to arrest me. I can get out of my problems if I call them back immediately.

I’ve called back three times. The first time, I got flustered when asked for personal information, and told the guy I knew it was a scam. The third time, the call center noises were so loud that I could barely hear the person, and eventually, she put me on hold and then the call dropped. The second, though …

The second, I told the guy on the phone that my name was Carlos Danger. (I had to spell “Danger” for him.) I gave him a fake string of 9 digits (that he read back to me, and I was lucky that I mostly remembered it. Protip: if you’re giving a fake SSN to scammers, do something memorable. David Herzig, for example, recommends 867-53-0909). He put me on hold, and checked his computer, and then told me his records showed I owed $9,700 in back taxes.

I’m not entirely sure how they get the money. A friend tells me she once stayed on the phone for more than an hour, and ultimately the scammer asked her to buy iTunes gift cards and read him the numbers. In my case, though, the connection dropped before I could get to the how-do-I-keep-the-police-from-arresting-me part of the call. Still, the scam’s pretty common. It’s run out of India-based call centers. To date, more than 50 individuals, and 5 Indian call centers, have been indicted, and two individuals have pleaded guilty to fraud and money-laundering.

So here’s my question: why is this effective? Because it is effective: the scammers have defrauded Americans out of millions of dollars. I mean, I realize I’m not their target audience (though I wish they’d realize it and quit calling, or at least start calling on lines that don’t just drop in the middle of the call). I’m a news junkie and a tax junkie, which means I’ve known about the scam for at least a year. I also know that the IRS doesn’t initiate contact by phone, and isn’t going to threaten to have a taxpayer arrested. (In fact, prosecuting for criminal tax evasion is tough.)

But even if you aren’t paying attention, the operation is so cheap and flimsy. I mean, the initial robocall is horrible. When you call back, you hear noise in the background. Like, lots and lots of people calling. I don’t know anything about the logistics of call centers, but most I’ve called mask background noise a little. The people you talk to aren’t professional. You’re clearly talking to an Indian call center. And you’d think, if we’re here to onshore and Make America Great Again, we wouldn’t use offshore call centers to collect delinquent taxes.

I can think of a handful of reasons why people might fall for the scams:

  1. They actually haven’t paid their full taxes in the past.
  2. The tax law is such a black box to them that they don’t know whether they’ve paid their full taxes in the past.
  3. The IRS is such a terrifying organization that they don’t bother with rational thought.
  4. The victims are primarily senior citizens, who are apparently especially vulnerable to telephone scams.

I guess I don’t have a lot of sympathy for people who fall into category (1), though I’d rather they paid their back taxes to the government rather than to scammers.

Categories (2) and (3) are troubling to me, because they basically indicate that Americans lack tax literacy. (They do.) If it’s purely a matter of tax literacy, it’s probably a fixable problem. I’m not sure what form of education would work, though, given that it’s kind of hard to avoid news about this tax scam, at least if your eyes are open.

I’m afraid, though, that the scam will be with us for a while. Sure, enforcement has stepped up, but, as one guy I reached said to me (in much more vulgar language): he’s not afraid. He’s been doing this for 5 years, and they use fake numbers and are tough to find. As long as there’s money in it—which means as long as people fall for it—these phone calls will keep coming.

[Immediate update]: As I’ve been reminded on Twitter, Congress has allowed private debt collectors to collect on (some) delinquent tax accounts. That’s a problem, because it legitimates the idea that someone can call you about unpaid taxes. True, the IRS and the collection agency have to send you a letter saying your account has been transferred, and the collection agency can’t threaten you with arrest or collect using iTunes gift cards, and can’t identify themselves as IRS agents. But these seem pretty fine distinctions for the people falling for these kinds of scams already.

One thought on “… and police are on their way to your house to arrest you

  1. Yep, the new phase of private debt collection is not going to help on this score, as I mentioned on NPR: https://www.marketplace.org/2017/04/18/your-money/irs-bring-private-debt-collectors. The IRS tried to dispel confusion its announcement (https://www.irs.gov/businesses/small-businesses-self-employed/private-debt-collection) but how many people besides us read news releases on the IRS website?

    That’s just one of the problems with private debt collection. Also, my read is that Congress didn’t just authorize this round of private debt collection, it mandated it. See IRC § 6306(c)(1) (“Notwithstanding any other provision of law, the Secretary shall enter into one or more qualified tax collection contracts for the collection of all outstanding inactive tax receivables.”)

    Liked by 1 person

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