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Scam Alert: The “Federal Student Tax”

June 7, 2016

A new tax scam targeting students has been quickly gaining momentum. Scammers are making calls to demand payment of a non-existent tax, which they call the “federal student tax”. No such tax exists, but scammers are tricking people into paying it. The IRS has issued a warning to taxpayers, asking them to remain cautious.

How This Scam Is Operated

Scammers make a telephone call pretending to be the IRS, and demand payment of the bogus “federal student tax”. They convince the taxpayer to wire the payment immediately. If the taxpayer shows reluctance, the scammers can become aggressive and threaten to report the student to the police.

Scammers typically use certain personal information that makes their calls appear legitimate. They might have obtained information, such as the student’s name and the name of the student’s educational institute. Also, scam artists may use sophisticated technology to masquerade as IRS employees or the police. They use names of real IRS agents, and generate false indicators of IRS caller-IDs to appear authentic.

These scams and schemes continue to evolve nationwide, and now they’re trying to trick students,’ IRS Commissioner John Koskinen said, “Taxpayers should remain vigilant and not fall prey to these aggressive calls demanding immediate payment of a tax supposedly owed.”

Finding Out Their Fake

Any unsolicited phone call claiming to be from the IRS where the individual demands immediate payment, especially through wire transfer or a prepaid debit card, is a fake. The IRS will mail a notice regarding the payment of any taxes due.

A person that threatens the taxpayer with arrest, deportation, license revocation, etc. for not paying taxes immediately, is a fake. The IRS follows an established process to collect back taxes, which begins with notices sent via post. The tax agency provides sufficient time to the taxpayer to pay any back taxes, and with a variety of payment options.

A person asking for personal, financial or tax information over the phone such as credit or debit card numbers, PINs, tax filing status, or social security number, should immediately raise a red flag. Before sharing sensitive information, always confirm the identity of the caller.

How to Respond

Upon receiving such calls, taxpayers should immediately hang up. They should not communicate with the scammer at all. Many of them are seasoned criminals operating in a group. Instead, report the call to the Federal Trade Commission by visiting ftc.gov and clicking on ‘File a Consumer Complaint’. Add “IRS Telephone Scam” in the notes. Alternatively, taxpayers may call the TIGTA at 800-366-4484.

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