Beware of tax scams

Beware of tax scams »Play Video
BOISE, Idaho (KBOI) - As accountants gear up for tax season, so do the scam artists. Tactics range from promises of a faster or bigger refund to threats of arrest or prosecution. The government estimates scams will cost taxpayers $ 21 billion this year. Consumer Reports tells you how to avoid them.

Allen Abrams was stunned recently to get a phone call from someone who sounded like a legitimate I-R-S agent. He demanded a five-thousand dollar 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," Abrams said.

This type of brazen attempted fraud has happened in nearly every state. Consumer Reports says the first red flag was the phone call. The I-R-S 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," Abrams said.

Another type of scam can come through texts and e-mails, 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," Tobie Stanger of Consumer Reports said.

The IRS does not ask for personal information by e-mail or text, so these too are red flags.

"If you think you have gotten an e-mail phishing for confidential information, send it to phishing@irs.gov. And if you get a suspicious phone call, report the incident to the authorities," Tobie Stanger of Consumer Reports said.

You can contact the Treasury Inspector General for Tax Administration at 1-800-366-4484. 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, Consumer Reports cautions don't fall for too-good to-be-true promises about a big refund 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.