The IRS Lawsuit Scam: What It Is and How to Protect Yourself

The IRS won't threaten lawsuits over the phone, so who's calling?

The Internal Revenue Service (IRS) lawsuit scam is a type of IRS phone call scam. It typically starts with a robocall, a warning that the IRS is about to file a lawsuit, and a demand that you call them back to discuss your options. If you don't return the call, the scammer will often escalate with further menacing robocalls and additional intimidation, up to and including threats to place you under arrest.

What is the IRS Lawsuit Scam?

The IRS lawsuit scam is a type of IRS phone scam where the scammers try to pass themselves off as IRS agents. They may claim to work for the IRS investigative bureau, and may even provide you with a fake name and badge number if you ask. Unlike real IRS agents, these scammers use intimidation tactics and threats of lawsuits and jail time to obtain money and sensitive data.

A book of tax law pictured with documents.
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How Does the IRS Lawsuit Scam Work?

This scam starts with the scammer initiating contact via the phone. The scam originally involved human scammers placing each call, but they have since moved on to robocalls. This allows a single scammer to cast a very wide net, and only have to personally deal with victims who actually call back.

When a scammer targets you with the IRS lawsuit scam, they load your number into a robodialer. This results in your phone ringing and displaying an unknown caller, an unfamiliar number, or even a spoofed IRS number. If you answer, you'll hear a prerecorded message that threatens you with a lawsuit and demands you call back.

The IRS phone number for individuals is 1-800-829-1040, and that is the only number you should ever call when contacting the IRS.

Here's an example of an IRS lawsuit scam phone call:

"Hello, this call serves as official notice that the IRS is filing a lawsuit against you for nonpayment of taxes. Please call back at 1.866-XXXX to avoid this lawsuit."

The callback number may be an 866 number, a Washington, DC or Ogden, UT number, or even match your own area code. In any case, the IRS phone number for individuals is 1-800-829-1040, and that is the only number you should ever call when contacting the IRS.

If you call the number provided by the robocall, you will be connected to the scammer instead of the IRS. They will typically threaten you with a lawsuit and attempt to extract payment, usually though a prepaid credit card or wire transfer. These methods are not used by the IRS, which is sure proof that you're dealing with a scammer.

In some cases, the scammer may try to obtain your social security number, taxpayer identification number (TIN), or other sensitive personal or financial information.

IRS lawsuit scammers often try to bully and harass you, and scare you with threats of a lawsuit or jail time in hopes that fear will prevent you from thinking clearly. If you ever feel like this, even if you suspect that you're dealing with real IRS agents, hang up and call the official IRS phone number and explain your problem. You're almost certainly dealing with a scammer if they're behaving in an abusive manner and threatening a lawsuit or jail time.

Even if you really do owe back taxes, IRS agents want to work with you to get the bill paid, not harangue you into paying immediately with threats of jail time.

Will the IRS Sue a Taxpayer?

The IRS will sue over unpaid taxes, but only after a lengthy process and multiple attempts to collect or arrange a payment plan. You can even go to jail for nonpayment of taxes, but that is also the culmination of a long process, not something that agents call and threaten you with.

The important thing to remember is that the IRS doesn't call taxpayers to threaten them with lawsuits. If you do have unpaid taxes, the IRS will send a letter via the US mail, and they will provide you with the opportunity to appeal the assessment if you don't think you owe anything.

If you aren't sure if you're dealing with a scammer, the IRS provides some useful information about how to spot a fake IRS official. For example, the IRS never threatens to involve the local police or immigration officers, and they are required to advise you as to your rights as a taxpayer.

How Do IRS Lawsuit Scammers Find Victims?

IRS lawsuit scammers operate by casting an extremely wide net. The only thing you have to do to become the victim of an IRS lawsuit scammer is own a phone. They'll target children who don't yet pay taxes, they'll target tax professionals and lawyers, and they'll even call actual IRS officials.

By using robocalls, IRS lawsuit scammers are able to call a massive number of phone numbers, to the point where they don't really care who you are or how likely you are to fall for their scam.

Some IRS lawsuit scammers obtain your information through various data breaches, but they can also buy massive lists of numbers from companies that have loose data policies, scrape phone numbers from the internet, and obtain them through a variety of other sources.

How Do I Avoid Getting Involved in This Scam?

There's nothing you can do to keep IRS lawsuit scammers from calling you. Even if you're very careful with your phone number, it will get out over time, and you'll end up being targeted by scammers like these.

The best thing you can do to avoid getting caught up in the IRS lawsuit scam is to be careful about answering your phone, and even more careful about returning calls. If you can afford to screen unfamiliar calls, that's an effective way to weed out scams like these. And if you can't, then learn to identify robocalls and simply hang up whenever you receive them.

The single most important thing is to never return a phone number provided by a robocall. If you receive a call that claims to be from the IRS, even if it seems legitimate and doesn't immediately sound any alarm bells, never call back the number they provide.

Instead of calling the number left by the robocaller, call the actual IRS number: 1-800-829-1040. In the very unlikely event that the IRS did call you, calling the official IRS number is the best way to receive assistance and make sure that you're really dealing with an IRS official.

The IRS never asks for payment via prepaid cards, gift cards, iTunes cards, wire transfer, or any similar method. If an IRS agent asks for payment via anything other than a check addressed to the US Treasury, its a scam.

I'm Already a Victim. What Should I Do?

Being prepared is the best defense, but people still fall victim to this devious scam all the time. If you're concerned that you are a victim of the IRS lawsuit scam, then your next actions will need to be based on how deep you fell into the scam.

If you received a suspicious phone call and called the number they provided, but you didn't give them any information or make any payments, you're fine. You will probably be subjected to additional harassment, since the scammer knows they've found a working phone number attached to a potential victim, but all you can do is ignore them.

If you've gotten any deeper, either by providing sensitive information or payment, then it's very important that you contact the Treasury Inspector General for Tax Administration to report the scam. You can use their website, or you can call 1-800-366-4484.

The IRS also recommends you report the scam to the Federal Trade Commission using the FTC Complaint Assistant website. When you fill it out, type "IRS Telephone Scam" in the notes section.

You can also use all of those same reporting methods even if you only received a suspicious call, or called back without actually getting fooled by the scammer, but that's up to you.

If you did give up personal or financial information, we have a great list of steps to take after being scammed. The key is to take proactive measures to prevent the scammer from stealing your identity.

How Do I Avoid Being Targeted for the IRS Lawsuit Scam?

Unfortunately, there's nothing you can really do to avoid being targeted by the IRS lawsuit scam. The problem is that the scammers don't obtain your phone number through any fault or mistake on your part. They simply cast the widest possible net by calling as many numbers as possible.

Since there's no way to avoid being targeted by the IRS lawsuit scam, all you can do is hang up on robocallers, screen your calls if possible, and remember that legitimate IRS officials don't threaten to file lawsuits over the phone.

When in doubt, always call the official IRS phone number, politely explain your situation, and ask for assistance. The only way to become a victim of this scam is to call a fake number provided by a robocaller, so the best way to stay safe is to never call back a number of dubious provenance. Stick with the official contact methods provided by the IRS, and the scammers won't be able to get you.