If an official from the Internal Revenue Service calls and demands immediate payment for thousands of dollars in back taxes, Al Cadenhead has some unexpected advice: Hang up.
Cadenhead, a 67-year-old senior pastor from Charlotte, N.C., testified before Congress on Wednesday about how he lost more than $16,000 to a fraudster pretending to work for the IRS.
He’s not alone. The Federal Trade Commission received more than 22,000 complaints of tax-related “impostor scams” in the first three months of this year.
The FTC received 527 complaints about IRS impostor scams from Missourians last year and 270 from Kansans. The 36 people in Missouri who formally filed complaints with another office, the Treasury Inspector General for Tax Administration, as of February of last year reported losing $111,995. In Kansas, 13 victims filed complaints to the inspector general during the same period for scams that they said cost them $56,837.
Even the inspector general for the IRS and members of Congress have received calls from con artists claiming to be IRS agents. The phony tax collectors threatened to throw them in jail unless they sent payment right away using wire transfers or prepaid cards.
Such incidents likely are underreported by victims who are embarrassed or who don’t realize they’ve been taken in, according to the FTC. The federal government estimates that crooks make 9,000 to 12,000 calls impersonating government officials every week.
In Cadenhead’s case, he received a voice mail on his cellphone from a Washington area code in October. The woman who left the message said she worked for the IRS and he was being charged with tax fraud for miscalculations on his tax returns from 2008 to 2011. Cadenhead needed to return the call immediately, she said, or have his attorney call.
When he called back, the woman said Cadenhead owed $4,900 and transferred him to a man who claimed to be her supervisor. The man identified himself as “Steve Evans.” He told Cadenhead that the IRS would issue a warrant for his arrest and contact the media unless he loaded $500 onto five prepaid Green Dot Visa cards and transmitted the numbers immediately.
Over the next six and a half hours, Cadenhead would go multiple times to different Rite Aid stores to buy more cards at the man’s request until he had sent a total of $16,000 to the scammers.
“He directed me to every Rite Aid, told me how to get there,” Cadenhead told senators Wednesday.
The pastor said he was the perfect victim. Close to retirement, he had accumulated assets and had never had any trouble with the IRS. He had no idea the government would never ask for payment through prepaid cards or money transfers, or request a credit card number over the phone. He panicked.
Cadenhead said he hoped sharing his experience might keep others from falling for the same scam.
“I get no pleasure out of sharing such an embarrassing experience,” he said. “My only reward for being public with my shame is to communicate to as many people as possible that the IRS does not do business over the phone and that when calls are received, hang up.”
Cadenhead’s story was featured in a tax day hearing on Capitol Hill to examine what, if anything, the federal government is doing to stop the rampant fraud. Several senators — including Republicans Thom Tillis of North Carolina and Dean Heller of Nevada — told Cadenhead that their own relatives had received scam calls.
“It’s easy to see why he and thousands of others have fallen for this,” said Sen. Claire McCaskill of Missouri, the top Democrat on the Special Committee on Aging.
“The IRS is an agency that does strike fear into Americans’ hearts, and many are scared of both the tax code, its complexity and the agency itself,” McCaskill said. “So when they receive a threatening call from a 202 area code, it’s no wonder so many people believe what they are hearing.”
Most of the calls originate overseas, but scammers use technology to trick caller ID into making it look as if the call is coming from the IRS in Washington or a local police department.
Hundreds in Missouri have received the calls, McCaskill said, and the state’s Better Business Bureau warns the scam has become an epidemic.
The FTC received more complaints last year about these kinds of impostor scams from Missourians than all other types of fraud except debt collection, McCaskill said.
The senator recounted one complaint filed by a Missouri woman who endured eight hours on the phone with the scammers and lost more than $16,000. Another woman from Missouri lost $15,000 after a man impersonating an IRS agent threatened to arrest her, put a lien on her assets and notify her boss, she said.
McCaskill and the Republican chairwoman of the committee, Sen. Susan Collins of Maine, both harshly criticized the U.S. Department of Justice for declining an invitation to testify at Wednesday’s hearing.
Despite the prevalence of the scam, the department has prosecuted just three IRS impersonators nationwide, Collins said.
“And these weren’t the criminal masterminds running the scam, they were low-level operatives,” she said. “I do not understand the department’s apparent indifference, and its refusal to testify is unacceptable. I can only conclude the department does not want to be held accountable to answer questions about its poor record.”
The senators also expressed concern that federal, state and local agencies are not coordinating their efforts to shut down the networks of con artists who run the scams.
“Millions of dollars are at stake here, and it doesn’t appear that writ-large law enforcement in this country cares enough,” McCaskill said. “If these people were moving crack cocaine or heroin, we would have a multijurisdictional task force immediately.”
How to avoid the scam
What to do if you get a call from someone who claims to be with the Internal Revenue Service asking you to pay back taxes:
▪ If you owe or think you might owe federal taxes, hang up and call the IRS at 800-829-1040. IRS workers can answer your questions.
▪ If you don’t owe taxes, call and report the incident to the Treasury Inspector General for Tax Administration at 800-366-4484.
▪ File a complaint with the Federal Trade Commission at FTC.gov. Add “IRS Telephone Scam” to the comments in your complaint.
Source: Internal Revenue Service