Allen Abrams was stunned recently to get a phone call from someone who sounded like a legitimate IRS agent who demanded a $5,000 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," said Abrams.
This type of brazen attempted fraud has happened in nearly every state. Consumer Reports says the first red flag was the phone call. The IRS typically contacts people first by mail, not by phone.
"Still, the imposters can be quite convincing," said Tobie Stanger, a Consumer Reports senior editor. "They often use phony names and IRS badge numbers. They even enlist accomplices who claim to be the police."
Another type of scam can come through texts and emails that 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," said Stanger. "That way the scam artist can steal your identity, and then they can claim your refund using a fraudulent tax return."
The IRS does not ask for personal information by email or text, so these too are red flags.
"If you think you have gotten an email phishing for confidential information, send it to firstname.lastname@example.org," said Stanger. "And if you get a suspicious phone call, report the incident to the authorities."
You can contact the Treasury Inspector General for Tax Administration at (800) 366-4484. It may also be appropriate to alert the FBI. That's what Abrams 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.