Justice Department Busts Tax Scammers

Inside Subprime: Aug 1, 2018

By Kerry Reid

Stop us if you’ve heard this before: someone gets a call from an individual claiming to be with the Internal Revenue Service or U.S. Citizenship and Immigration Services. They are told by the caller that they owe money to the IRS, and/or that there is a warrant out for their arrest. The only way to avoid dire consequences is to wire money or to make a payment with a stored-value card. (The latter is essentially a gift card with a set amount on it that looks like a regular credit card and can be purchased at various retail outlets. It’s also known as a prepaid debit card.)

Despite numerous warnings, people are still frightened enough by these calls to give in and give up the money. But now the Justice Department has busted one of the scam outfits, leading to sentences for 24 defendants in what, as reported by CNBC, U.S. Attorney General Jeff Sessions called the “first-ever large scale, multi-jurisdiction prosecution targeting the India call-center scam industry.”

The operation ran in the United States and India between 2012 and 2016.

Twenty-two of the defendants must pay $8.97 million in restitution to the victims of the scam, with twenty-one paying more than $72.9 million in judgments. In total, 56 individuals and five companies based in India have been charged in connection with the fraudulent scheme.

The case, known as US v. HGlobal et al, charged that the defendants made calls threatening tens of thousands of victims in the United States, using information obtained from data brokers and other sources. The indictment claims that the defendants, using call centers in India, threatened the people they called with fines, imprisonment, arrest or deportation if they didn’t pay taxes or penalties to the government.

If the victims were frightened enough to agree to pay, then the call centers would use U.S.-based co-conspirators to arrange to receive the funds through wire transfers or the prepaid stored-value cards. The Department of Justice also claims that the cards were registered using identity theft, with the wire transfers also using fake names for the recipients of the funds.

With this case in the news, it’s worth revisiting advice on how to avoid being the victim of these scams.

First and foremost: you should know that the IRS never makes its initial contacts through telephone. As reported by CNBC, “The IRS will typically initiate contact through what is called a CP2000 notice. That notice informs you that the IRS has information that does not match your tax return. There is a formal process for individuals to respond.”

And as noted in the CNBC report by Jackie Perlman, principal tax research analyst at the Tax Institute at H & R Block, “It could be you really do owe money, but it won’t be by putting it on an iTunes gift card.”

If you believe you were targeted in the HGlobal scam or another IRS-related scam, you can fill out a complaint form online with the Federal Trade Commission.

You can also contact the Treasury Inspector General for Tax Administration at 1-800-366-4484 or via their website.

And as always, if you receive a call from anyone claiming to represent a government entity or a charitable organization, the most prudent course of action is to ask that they mail you information. Never give out any personal information – especially credit card information or Social Security numbers – to a caller, no matter how threatening they sound. (In fact, the more threatening they are, the greater the likelihood that they are trying to scam you. Real charities don’t encourage strong-arm tactics from people calling on their behalf, for example.)

The IRS also issues a list every year of the “dirty dozen” tax scams to watch out for. These tend to peak during tax season, but the dirty operators are standing by year-round. So be aware.

You can find the 2018 list here.