Consumer Reports: Avoiding tax scams

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Consumer Reports tells you how to spot a scam so you don't become a victim. (WLS)

Tax season is rife with scammers using clever ways to scare you into handing over your money.

Hundreds of thousands of people have been targeted in the past few years. Consumer Reports tells you how to spot a scam so you don't become a victim.

Alex Gutierrez' nightmare started with a phone call allegedly from an IRS official. He was told his tax refund was a mistake and he had to return it that day or else.

"If I didn't send the money, they gonna cut me all my rights, I can't travel, I can't use my money in the bank," Gutierrez said.

Panicked, he wired $700 to a scam artist in Peru before he realized he'd been had.

"The U.S. Treasury Department says that this scam has been perpetrated in just about every state, and estimates that thousands of people have been defrauded of more than 26 million dollars," said Margot Gilman, Consumer Reports' chief money editor.

It can happen to anyone. This threatening message was left on the home phone of a Consumer Reports employee: "I'm calling regarding an enforcement action executed by the U.S. Treasury."

When she called back, she was told she could avoid arrest by immediately wiring more than $6,000 to clear her record. "You need to go to the bank first; you need to withdraw the money in cash."

When she balked, he threatened, saying: "We'll send the officers and you'll be arrested."

"It's critical to know the IRS never calls out of the blue. If you have a tax problem, you'll almost always first be contacted by mail," Gilman said.

Other things the IRS will never do:
- Demand immediate payment.
- Threaten imminent arrest or other enforcement action.
- Require a specific payment method like a prepaid debit card.
- Request confidential information on the phone.

Gutierrez says getting that call was very scary. But he knows now how to spot a scam.

If you suspect a call you get is a tax scam, report it to the Treasury Inspector General for Tax Administration at 1-800 366 4484 or file a complaint online at

All Consumer Reports Material Copyright 2016. Consumers Union of U.S. Inc. ALL RIGHTS RESERVED. Consumer Reports is a not for profit organization which accepts no advertising. It has no commercial relationship with any advertiser or sponsor on this site. For more information visit
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financeconsumer reportsscamstaxes

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