One of the newest tax scams making the rounds is directed at college and university students and involves what’s called a “federal student tax.”

The Setup
Here is how it works. A call is made directly to a student. The caller has some piece of information that links the student to the call, something like the name of the college or university they attend, or a more personal item, all of which is used to make the call seem more real.

The caller then tells the student they owe a “federal student tax,” which is something that does not exist, but the caller is very well equipped to make the student believe it does. While the student is trying to understand what the caller is talking about, the caller demands money and wants it wired through untraceable methods. And then, if confronted by the student, the caller makes threats to report the student to the police, the IRS or whatever agency or person they think will make the student bolt into action and send a payment or provide personal information, both of which should never be done.

How to Handle Scammers
So, what to do? Be aware of the federal student tax scam, talk to your kids or grandkids, and understand the best course of action when you or your student gets one of these calls is to just hang up. But that does not always end the process. You need to know and to warn your students that a caller who has been re-buked may have someone else call again, with an even graver message. However, with the knowledge that the federal student tax does not exist and that the IRS does not make these types of calls (the IRS will send a letter first if anything is owed), students, parents and grandparents can be more empowered to discuss and handle these situations.

Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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