Gift cards are a great last-minute gift or a present for that hard-to-shop-for person in your life. That’s why they are so popular, particularly during the holiday season.
The plastic presents also are popular with crooks.
They tamper with easily accessible gift cards in store displays, obtain card barcodes and other information, then put them back on the rack. When a card is purchased and activated, the criminals use it before the intended recipient gets a chance to enjoy the gift.
But gift card skulduggery continues beyond Dec. 25. They also play a part in some tax scams.
With the 2025 tax-filing season set to start in January, now is a good time for a refresher on how these cards are used by tax crooks.
Gift card tax scam tactics: Despite years of warnings and some success in shutting down Internal Revenue Service agent impersonators, crooks still call their targets or send a phishing email and pretend to be official tax agents.
They tell their intended victims that they owe taxes and must pay them as soon as possible or face a variety of unpleasant consequences. The threats range from revocation of drivers’ licenses to immigration status challenges to potential jail.
It's not a very sophisticated scheme, but the crooks have an advantage. Most of us are at least a little afraid of the IRS even when we know our tax situation is just fine.
So when victims are told by callers or email senders that they owe a federal tax bill, they tend to get a bit nervous. And they want things set right. Quickly.
That’s why they fall for the instructions that they pay the overdue tax amount by paying it using a gift card.
After following the crooks’ instructions to buy a card — or usually several cards from different stores — scam victims then call the fake IRS agents at a number left by the crooks and give them the gift card numbers and PINs.
That’s all it takes. All the money you spent on the gift cards is now gone, being spent by the crooks pretending to be IRS representatives.
If you do answer a gift card scam call, hang up. If you get an email message, don't respond. Ditto for any tax impersonation messages left on your voicemail.
And definitely don’t call the number left by the scammers.
What the IRS won't do: As a reminder, the IRS reiterates that most of what the gift card scammers demand are actions that Uncle Sam’s official tax agency employees will not take.
Specifically, the IRS won't:
- Call to demand immediate payment using a specific payment method such as a gift card, prepaid debit card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
- Pressure taxpayers pay taxes without the opportunity to question or appeal the amount they owe. All taxpayers should be aware of their rights in dealing with the agency.
- Threaten to bring in local police, immigration officers, or other law enforcement to have the taxpayer arrested for not paying.
- Threaten to revoke the taxpayer's driver's license, business licenses or immigration status.
Plastic the IRS accepts: While gift cards are a no-go when comes to paying Uncle Sam, he does accept tax payments via credit or debit cards, as well as digital wallets as more of us rely on mobile payment options.
The payments are made through IRS-authorized processors. And like all plastic transactions, there's a service charge. With taxes, however, we taxpayers cover this cost instead of the retailer, or in this case, the IRS.
Last filing season, the IRS approved three companies, shown in the table below.
|
PayUSAtax |
Pay1040 pay1040.com (888) PAY-1040 (888-729-1040) |
ACI Payments, Inc. fed.acipayonline.com 888-UPAY-TAX (888-872-9829) |
| Fees: 1.82% of amount paid or $2.69 minimum for credit card charges; $2.14 for debit payments | Fees: 1.87% of amount paid or $2.50 minimum for credit card charges; $2.50 flat fee for consumer or personal debit card or 1.87% for other debit cards | Fees: 1.98% of amount paid or $2.50 minimum for credit card charges; $2.20 for debit cards |
|
Payment types accepted: Digital wallet payments |
Payment types accepted: Digital wallet payments |
Payment types accepted: Digital wallet payments |
Again, the companies above are the 2024 tax year credit or debit payment processors. If there are any updates or changes for the coming tax season, they will show up on IRS.gov’s debit, credit, digital wallet payments page.
Tax account and scam follow-up: If you think there’s any chance you might have an outstanding tax issue, call the IRS directly. Or check out your tax compliance status by logging onto your online IRS account.
Anyone who has been a target of a scam should contact the Treasury Inspector General for Tax Administration to report a phone scam.
Use the IRS Impersonation Scam Reporting webpage or call toll-free (800) 366-4484.
You also can report the scam to the Federal Trade Commission, as well as your state attorney general.
The main precaution, during the holiday season and year round, is to use your common sense. Don’t panic. Don’t over react.
And if something sounds fishy, trust your intuition and follow-up directly with the IRS before taking any actions demanded by unsolicited callers or emailers.
You also might find these items of interest:
- Dirty Dozen tax scams of 2024: Part 1 and Part 2
- FCC takes action against tax debt robocall
- What do online holiday shopping and taxes share? Identity theft threats
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