BBB Tip: Tax Collection Scams

Every year, the tax collection scammers come out. Remember that the IRS and CRA will never demand payment by wire transfer, prepaid debit card, or other non-traditional payment methods.

tax in wooden blocks atop piles of changeTax collection scams are among the most persistent cons out there. They reappear frequently, each time with a slightly different spin. The main theme is scammers posing as an Internal Revenue Service representative in the U.S. or as the Canada Revenue Agency in Canada, and attempting to coerce you into either paying up or sharing personal information.

How the Scam Works:

These scams are most often perpetrated by phone and take two basic forms. In the first version, the IRS or CRA "agent" says you owe back taxes and pressures you into paying by prepaid debit card or wire transfer. If you don’t comply, the scammer threatens you with arrest and fines. In the other version, scammers claim they are issuing tax refunds and will ask you for personal information under the guise of transferring a refund. This information can later be used for identity theft. 

These imposters often go to great lengths to appear credible. The scammer may provide a fake badge number and name. Your caller ID will often indicate that the call is coming from Washington D.C. or Ottawa. In many instances, these scams are initiated with a very serious and official sounding “robocall” recording.

Tips to Spot This Scam:  

  • You are pressured to act immediately. Scammers typically try to push you into action before you have had time to think. The IRS and CRA will give you the chance to ask questions or appeal what you owe, and their first contact with you will always be by mail, not phone or email. 
  • Payment must be made by wire transfer, prepaid debit card, or other non-traditional payment methods. These methods are largely untraceable and non-reversible. The IRS and CRA will never demand these forms of payment.


To report a scam, go to BBB Scam Tracker.

To learn how to protect yourself, go to “10 Steps to Avoid Scams”.

Last Reviewed: March 7, 2017