There's a new breed of income tax fraud that doesn't involve cheating the Internal Revenue Service: instead, scam artists are posing as IRS collectors to cheat taxpayers. In recent years, IRS impersonators have been showing up at people's homes to collect what they describe as unpaid taxes. The phony IRS person usually demands immediate payment, in cash, or conducts an on-the-spot audit of the taxpayer's records to obtain valuable credit information. "It's the fear of authority I think that gets people to give money to a person who misrepresents himself as an employee of the IRS," says John Schnellmann, an IRS spokesman. "They mostly prey on the elderly. It's common during the tax months from January to April."
The most common scheme involves fictitious contests, the IRS says. The impersonators call victims to tell them they've won a prize but in order to receive their money the victims first must pay the federal tax on the prize in cash. "The key is to always ask for identification," Schnellmann says. "IRS employees carry a Department of Treasury ID card that a scam artist is not likely to have. You can always call the person's supervisor to verify their ID."