One local victim recently lost more than $10,000 in the scam, buying multiple re-loadable cards in two separate transactions, according to police reports.
According to the IRS, the phone scam has become "pervasive" during tax season.
"This scam has hit taxpayers in nearly every state in the country," IRS Acting Commissioner Danny Werfel said in a statement.
In the scam, victims are contacted on the phone by a person who claims to be from the IRS. Police say the person can be very convincing, often with the victim's personal information, including his or her name, address and date of birth.
The culprit tells the victim that he or she owes money due to a discrepancy from past taxes and unless the fines are paid immediately, the victim will be arrested. In order to avoid the penalty, the suspect demands that the victim go to a local store to purchase a re-loadable card.
Once the cards are purchased, the suspect asks for the card number and personal identification number to the reloadable card. With that information, cash that was loaded onto the card can be redeemed at stores, transferred to another account or withdrawn at ATMs.
In several recent cases in South San Francisco, fake agents contacted residents and said they owed large amounts of money in back taxes, according to police.
The scammers threatened arrest if the victims did not make a payment using an untraceable, pre-loaded debit card with an access number, police said.
"If somebody unexpectedly calls claiming to be from the IRS and threatens police arrest, deportation or license revocation if you don't pay immediately, that is a sign that it really isn't the IRS calling," Werfel said.
The Pleasanton Police Department wants residents to know that's not how the IRS does business.
Agents do not ask taxpayers for confidential PINs, passwords or access information to credit card, bank or other financial accounts, IRS officials said.
Anyone who owes taxes or has a payment issue should call the IRS directly at (800) 829-1040.
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