IRS Warns College Students About ‘Federal Student Tax’ Scam

Posted By Terri Williams on July 12, 2016 at 7:33 am
IRS Warns College Students About ‘Federal Student Tax’ Scam

Many college students walk a fine line between financial self-sufficiency and financial independence. And if they’re not accustomed to working and filing taxes, they may be susceptible to the unscrupulous attempts of con artists and tricksters.

For example, the Internal Revenue Service recently announced that scammers are calling college students and demanding payment for a “Federal Student Tax.” However, the IRS warns that there is no Federal Student Tax, and students should not comply with these fraudulent efforts to collect money.

Valrie Chambers, associate professor of taxation and accounting at the M.E. Rinker Sr. Institute for Tax and Accountancy at Stetson University, explains the scam in more detail. “Thieves actively call people that they’ve identified as college students and, pretending to be IRS agents, demand that students wire money or send gift cards for an unpaid federal student tax.”

The scammer may pose as a representative from the IRS, a state revenue department or a tax company. If the student appears reluctant to comply, Chambers says the thief threatens to turn them over to the police, warning that a warrant will be issued for the student’s arrest. “International students are especially vulnerable because of added language barriers, lack of a local and knowledgeable support system and a perceived fear of deportation,” Chambers says.

Other tax scams targeting students

In addition to the Federal Student Tax scam, students should be aware of other ways thieves try to con them. For example, sometimes a scammer may send an email while posing as a representative from the Taxpayer Advocacy Panel. While TAP is a legitimate volunteer organization that advises the IRS on taxpayer issues, it does not have access to a taxpayer’s financial and personal information and would never request it.

Sometimes, the TAP scam is conducted by phone, but whether by email or phone, the scammer wants to gain personal information such as social security numbers or credit-card PINs or banking accounts.

Some scammers even have the ability to manipulate caller identification information so it appears they are calling from an IRS-based number. With such sophisticated methods, how can students identify a scam?

  • The IRS will always send written communication before attempting contact by phone
  • The IRS will not demand immediate payment over the phone
  • The IRS will not immediately threaten to have taxpayers arrested
  • The IRS will provide an opportunity to challenge the amount owed
  • The IRS will never request a specific payment method, like a wire transfer or a debit or credit card payment
  • The IRS will never ask taxpayers to supply debit or credit card numbers over the phone

Students must also remain cautious and observant. “While the next iteration of scams is uncertain, it is common for these federal scams to be adapted at the state level for those states whose citizens pay income tax,” Chambers says. Because state tax authority procedures are similar to those used by the IRS, the guidelines above also apply to them, she says.

Terri Williams
Terri Williams graduated with a B.A. in English from the University of Alabama at Birmingham. Her education, career, and business articles have been featured on Yahoo! Education, U.S. News & World Report, The Houston Chronicle, and in the print edition of USA Today Special Edition. Terri is also a contributing author to "A Practical Guide to Digital Journalism Ethics," a book published by the Center for Digital Ethics and Policy at Loyola University Chicago.

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