"This is the largest scam of its kind that we have ever seen," J. Russell George, Treasury inspector general for tax administration, said Thursday in a release.
George said his office has received reports of more than 20,000 contacts and became aware of thousands of victims who collectively paid at least $1 million because of the scam in which individuals cold-call taxpayers and fraudulently claim to be IRS officials demanding payment of back taxes.
"The increasing number of people receiving these unsolicited calls from individuals who fraudulently claim to represent the IRS is alarming," he said. "At all times, and particularly during the tax filing season, we want to make sure that innocent taxpayers are alert to this scam so they are not harmed by these criminals. Do not become a victim."
George said the scam, being run in all 50 states, features callers claiming to be from the Internal Revenue Service telling intended victims they owe taxes and must pay using a pre-paid debit card or wire transfer. The scammers also threaten those who refuse to pay with arrest, deportation, or loss of a business or driver's license.
George said IRS agents first contact people by mail about unpaid taxes and won't ask for payment using a pre-paid debit card or wire transfer. Agents also won't ask for a credit card number over the phone.
"If someone unexpectedly calls claiming to be from the IRS and uses threatening language if you don't pay immediately, that is a sign that it really isn't the IRS calling," he said.
Taxpayers are urged to be alert for phone and e-mail scams using the IRS name, George said. The IRS never requests personal or financial information by email, text or any social media.