How the Scam Works:
Your phone rings, and the Caller ID shows it's from the IRS. When you answer, the caller claims to be an IRS agent. He or she says that you failed to pay your "federal student tax." Now, insists the caller, you are wanted for tax evasion and a warrant will be issued for your arrest.
However, the "agent" can clear your name if you pay the tax immediately. You need to go to a nearby store and purchase a prepaid debit card, money order, or even a gift card and read the numbers to the "agent." If you do so, the "agent" will steal the money and disappear.
IRS impostors often go to great lengths to appear realistic. Victims report that scammers use Caller ID spoofing technology to appear to be calling from IRS headquarters in Washington, DC. Con artists sometimes follow up scam calls with an email, which use the IRS logo, colors and official-sounding language.
How to Spot an IRS Impostor Scam:
Note that, although this particular scam is based in the U.S., similar scams mimicking the tax agency often appear in other countries. Canadian Revenue Agency scams are huge in Canada.