Why ‘Pay Now or Be Arrested’ Tax Scams Still Fool People -- and How Not To Fall for Them
You’re too smart to fall for a tax scam. Or so you thought. But the person on the phone who says they’re an agent with the Internal Revenue Service sounds authoritative and convincing. Could they be right? Do you owe significant back taxes?
They say they “don’t want to scare you,” but if you don’t settle up right now, you could be going to prison. And orange is definitely not your color.
Read More: 7 Ways You're Accidentally Committing Tax Fraud
Learn About: 16 Tax and IRS Scams and How To Spot Them
You wouldn’t be the only person to fall for a “pay now or be arrested” scam this tax season. Just last year, The Kaplan Group reported that tax scams resulted in more than $5.7 million in reported financial losses in 2025. According to the firm, reports of tax scams increased about 62% year over year during the same period.
So it may not be a matter of if you encounter one of these scams, but when. Why might you be fooled — and what can you do to protect yourself? MoneyLion did some research.
Scammers Know How To Impersonate Power
The hallmark of a skilled scammer isn’t always the ability to hack even the most secure computer. As Tracy Lamourie, a founding board member of the John Parkinson Family Foundation, which works to combat senior scams, explains, talented fraudsters are adept at projecting authority so convincingly that people don’t question them — right down to the scripts they use.
“People need to understand that scammers don't hack computers, they hack authority,” she said. “Scammers study human psychology the exact same way research companies study consumer behavior. You have to understand that these scripts are far from random. They literally design them to push the victim from fear to payment in minutes, and sadly that often works.”
Scammers know that invoking taxes, the government or the police will scare people. They are counting on fear to override common sense and rational decision-making.
How to avoid falling for it: First, Lamourie wants you to acknowledge that even a smart person like you can fall for a scam. To protect yourself, recognize that being responsible about taxes and authority figures actually makes you a prime target.
“Scams are specifically engineered so that smart people who are otherwise responsible — people who take authority seriously — will respond,” she said.
These Scams Use Urgency To Override Your Better Judgment
When your head fills with images of police banging on your door and IRS attorneys lambasting you in court, fear can easily overtake logic. The suddenness of the message — and the doom it portends — rushes you into what Lamourie calls “what-if scenarios.” What if this is true? What happens if you ignore it?
Scammers don’t want you to stop and take a breath. If you did, you might check with your accountant or review your documents and realize you don’t owe back taxes and aren’t in trouble.
“The most dangerous sentence in a scam call is this: You must act right now, now, now, now. Urgency is the real weapon of the scammer,” she said. “People really need to understand that and just take a breath, pause and evaluate. Victims are caught in a moment when that fear outruns their regular suspicion to verify.”
How to avoid falling for it: Pause. If you stop for a second, you might realize that Uncle Sam reaching out via a random phone call or text message seems, frankly, odd. Lamourie emphasizes that government agencies don’t demand money in a panic.
“They're never going to be saying do it right now, do it this second,” she said. “Panic is not the government's business model. It is a scammer's business model.”
In fact, the IRS generally initiates contact with taxpayers by mail — not by phone, text or social media. If you receive a threatening call demanding immediate payment, that is a major red flag.
Instead of giving in to panic, verify. Call your tax preparer. You can also contact the IRS directly through its official website or phone numbers — which may sound scary, but it’s far less terrifying than falling victim to a scammer.
Scammers Make People Feel Isolated To Make Them More Vulnerable
Another hallmark of these scams is the caller, posing as an IRS agent, insisting you can’t tell anyone about the situation. Lamourie describes isolation as a scammer’s best weapon because it keeps people too fearful to think clearly.
“[Scammers] isolate people far before they even try to steal anything,” she said. “If a caller tells you ‘don't talk to anybody else about this,’ or ‘do this right now,’ or ‘there's no time,’ that in itself is the scam. That's the sign of the scam.”
How to avoid falling for it: Follow what Lamourie calls the “pause rule.” If anyone contacts you demanding money for any reason, at any time, your first response should be to hang up, talk to someone you trust and verify the request.
She recommends sharing this rule with everyone in your family, especially senior relatives.
“Always make sure that seniors and other family members understand that no legitimate government agency is ever going to demand immediate payment over the phone at that moment, and they will never threaten arrest during a call,” she said. “That's never going to happen.”
The Bottom Line
Scammers are getting more sophisticated in targeting both your money and your peace of mind. But you don’t have to let them win. With a better understanding of how they operate and a plan to resist fear-based tactics, you can avoid falling into their trap.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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