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College Students Beware: Federal Student Tax Is Not a Thing

May 24th, 2016 · No Comments · Consumer Info

by Credit Info Center

(Last Updated On: December 21, 2017)

college students beware federal student tax scamIf you get a call from an IRS agent claiming you owe “federal student tax,” hang up. It’s a scam. In fact, it’s part of the largest tax scam in history – crooks calling consumers to impersonate IRS agents, saying they owe unpaid taxes, and pressuring them into making immediate, untraceable payments. As reported by Bankrate, roughly 896,000 consumers have received calls like this, more than 5,000 of whom have become victims, collectively costing them more than $26.5 million.

How the Federal Student Tax Scam Works

The FTC says the federal student tax scam works like this:

1) A college student gets a call from someone claiming to be with the IRS.

2) To make the call seem legitimate, they may use caller ID spoofing that says it’s the IRS. They may also be able to provide you with personal information convincing you the call is legit, like your name and address, or the name of your school.

3) They say you owe federal student tax (which is not a thing, by the way).

4) They ask you to make an immediate payment, by wire transfer, iTunes gift cards, or reloadable prepaid cards (all untraceable).

5) If you express reservations, they may threaten to call the police.

6) If you hang up (as you should), other fraudulent calls may follow, again with caller ID spoofing, saying the call is come from the IRS, other government agency, police, or 911.

Protecting Yourself

If you receive an unexpected phone call from someone saying they’re with the IRS, hang up and file a complaint with the FTC immediately. The IRS also asks that you file a report with the Treasury Inspector General for Tax Administration (TIGTA). And keep in mind that, even if they do not reference the fake “federal student tax,” it’s probably still a scam.

The IRS says it will never:

  • Make initial contact by phone. They send you a letter first. As IRS Commissioner John Koskinen says, “If you are surprised to be hearing from us, then you’re not hearing from us.”
  • Pressure you to make immediate payment without the opportunity to question or appeal it
  • Ask you to pay by wire transfer, iTunes gift cards, or reloadable prepaid cards
  • Ask for credit or debit card information over the phone
  • Threaten to call the police for non-payment

If you know you owe legitimate taxes, or think you might, hang up anyway. Then contact the IRS directly at 800-829-1040.

Tax refund fraud is on the rise, too. Find out what the IRS is doing about it.

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