IRS Impostor Scam Robs Elderly Americans of Life Savings

It's the top complaint to a U.S. Senate hotline for seniors: fraudsters posing as IRS agents, threatening arrests and demanding money.

Treasury Department official Timothy Camus told the Senate Aging Committee on Wednesday that more than 10,000 people have reported falling prey to the so-called "IRS impersonation scam" over the last several years — many of them elderly Americans.

Phillip Hatch, who is 81 and testified before the panel via video, told lawmakers how he received a phone call one day at his home in Portland, Maine. The caller told him there was a mistake on his tax returns and federal marshals were coming to arrest him unless he paid the money. Worried, Hatch did as instructed and went to the local CVS to purchase iTunes cards. He then read the numbers on the backs of the cards to the caller. After four hours on the phone with the caller, Hatch was out $8,000. He told the panel he wishes he hadn't been "so cooperative."

Republican Sen. Susan Collins of Maine, chair of the committee, says the criminals who prey on seniors are relentless. "They will harass seniors over and over again until they have drained every penny from their life savings," she said.

Federal officials, from Treasury and the Federal Trade Commission, testified about efforts to combat the fraud on senior Americans.

Last October, more than 50 people were indicted in a scam that involved call centers in India and bilked thousands of victims out of more than $270 million. Camus, with the Treasury Inspector General for Tax Administration office, says it is the largest single domestic law enforcement action to date related to the IRS impersonation scam.

For some time, scammers had been duping victims into getting money orders. More recently, however, Camus says his office has seen a shift to iTunes cards because it's easier to get the money since the scammers no longer need middlemen to convert the money orders. "They're now selling the iTunes cards on the third party market and pocketing the money immediately," Camus said.

The Senate Aging Committee has a hotline for seniors to call about fraud (1-855-303-9470). Last year, the hotline received more than 2,200 calls from people all over the country — more than double the number of calls from 2015. The top complaint was the IRS impersonation scam. That was followed by lottery or sweepstakes scams, in which callers promise a huge lottery prize that can only be awarded if taxes and other fees are sent immediately to the caller.