Personal Finance Tip of the Week, By Financial Fundamentals, LLC of Watertown

​An IRS phone scam that began last year shows no sign of letting up. Just recently a local TV news station reported that the scam had attempted to exploit residents in a Boston suburb.

Here’s how the scam unfolds. You get a phone call from someone who claims to be from the IRS. In an aggressive and threatening tone, the person says that you owe money to the IRS and must pay up immediately or face punitive action. The action that is described varies, but may include arrest, court judgment, loss of license, or deportation. The person then tries to get you to provide personal information and make a payment to them.

The IRS doesn’t approach taxpayers in this manner. Typically, if the IRS wants to gather more information about your tax filings, they will write you a letter and explain the nature of their inquiry. Also, the IRS doesn’t ask for payments over the phone.

My wife and I received two phone calls from scammers about a month ago. The caller claimed to be from the IRS but some aspects of the call weren’t very convincing. He sounded like he was calling from another country and used terms that are not common in the United States. For example, he used the term “magistrate” instead of judge or court.

But the IRS indicates that other scammers are more convincing. They may have the last 4 digits of your Social Security number, for instance. Also, they may manipulate caller ID. This can allow them to make an initial call that appears to be from the IRS, and a follow up call that appears to be from the local police. In addition, they may send you a follow up email.

If you get a call like this, do not provide any information to the caller and hang up.

If you wish, you can report the call to the IRS. The following link provides more details and phone numbers: http://www.irs.gov/uac/Newsroom/IRS-Warns-of-Pervasive-Telephone-Scam

It would also be a good idea to let your local police know if one of the scam calls claimed to be from them.

We live in a world where scams like this one are ever-present. The best defense is to be on the alert and use your good common sense. If your common sense tells you that a call may not be legitimate, hang up and call the organization yourself. That way, you know you are speaking with the organization directly.

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Stephen Barkhuff, CFP(R), CFA, MBA is the founder and president of Financial Fundamentals, LLC, based in Watertown, MA. Financial Fundamentals helps couples and singles with modest incomes take control of their financial future. You can reach him at mailto:SBarkhuff@FFundamentals.com.