Gift cards are great holiday gifts, but not a way to pay taxes

Christmas gift card wreath_Pinterest
Gift cards make great presents for family and friends, but they cannot be used to pay taxes. (Gift card wreath via Pinterest)

We all have people on our holiday gift lists who are hard — OK, impossible — to shop for. When I struggle to find the perfect gift, I follow my personal credo: Say it with cash. Or, more often, with plastic.

Yes, I give gift cards. And if family and friends are reading this, I am happy to get them.

But one place where gift cards aren't welcome is the Internal Revenue Service.

This IRS is making a point of reminding us during this 6th Annual National Tax Security Awareness Week that we cannot pay our taxes with gift cards.

The message also is timely since the end-of-year holiday season also is prime time for scammers and identity thieves, many of who demand their victims pay fake tax bills with gift cards.

Holiday season also is scam season: The increased criminal effort to snag personal data is twofold.

First, crooks want to use it for their own nefarious holiday shopping sprees.

Second, they can use the information early next year to file fake tax returns claiming fraudulent tax refunds.

The scams come in many forms. There's email phishing and phone calls from IRS agent impersonators. Some crooks even reach out via texts and social media.

But regardless of how the scam is initiated, a common ploy in many is the crook's instruction that their targets pay a fake tax bill by gift card.

Again, don't fall for gift card schemes.

The only plastic the IRS accepts is authorized credit or debit card payments via approved partners. And those payments are made when you, the taxpayers, do your own filing and tax paying, not when a sketchy caller or emailer reaches out to you.

How the gift card scam usually happens: The most common way scammers request gift cards is over the phone through a government impersonation scam.

This is the infamous call that goes "I'm with the IRS, and if you don't pay your tax bill now, you'll go to jail" … or be deported or lose have your driver's license revoked.

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.

The scammer then will tell the victim that the only way to resolve the issue is to pay the fictitious tax bill or penalty. The way to do this, according to the crook, is to buy gift cards from various stores.

Once the targeted individual does that, he/she is told to call the fake IRS agent back and provide the scammer with the gift card numbers and PINs.

If you're not around to answer, the scammer will leave a voicemail threat citing the fake unpaid tax bill or some other false criminal activity to which the intended victim is linked, along with a callback number.

If you do answer a gift card scam call, hang up. If you get a message, don't call the number.

What the IRS won't do: The gift card scam is just one that the IRS and its Security Summit partners at state tax agencies and within the tax industry are warning about this special week that kicked off Nov. 29.

The IRS also is highlighting what it will not do when it comes to taxpayers and any taxes they owe. 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.

Report scam attempts: If you've been targeted by scammers, the IRS wants to know. The more information it can collect about con artists' efforts and tax identity theft schemes, the better law enforcement's chances of catching the crooks.

If you do not owe taxes, fill out the "IRS Impersonation scam" form on the Treasury Inspector General for Tax Administration (TIGTA) website. If you prefer, call the oversight agency toll-free at (800) 366-4484.

When it comes to phone scams, also file a complaint with the Federal Trade Commission. Add "IRS Telephone Scam" to the comments in your complaint.

Report threatening or harassing telephone calls claiming to be from the IRS to phishing@irs.gov. Include "IRS phone scam" in the subject line.

And if you do owe federal taxes (or think you might) and haven't yet made arrangements to settle that bill, call the IRS directly, again toll-free, at (800) 829-1040 and talk with a real IRS representative who can help you with your payment questions.

You also should talk with a tax professional whose experience is worth his or her fee in helping straighten out your tax noncompliance situation.

Holiday security tips IRS graphic

And during this National Tax Security Awareness Week, be alert and careful so that you can enjoy scam-free holidays.  

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Gift cards are great holiday gifts, but not a way to pay taxes