Con artists steal millions by posing as IRS agents

When the IRS comes calling, taxpayers might get nervous.

An ongoing scam is capitalizing on that fear to steal victims' life savings. It started months ago.

The perpetrators are still at large and now 90,000 people across the country have reported hoax calls, CBS News correspondent Nancy Cordes reports.

The scam starts like this: a victim receives a call on the phone by someone pretending to be from the IRS, saying that person owes thousands of dollars in back taxes.

Officials say it's not just effective; it's one of the largest scams they've seen.

"I just felt stupid," said Los Angeles resident Seila So. "I just felt dumbfounded that this happened to me."

Last month, So returned a phone call she was convinced was from the IRS.

"I didn't think the IRS would tell me a lie," she said.

The caller told So she owed $30,000 in back taxes.

In a second call, he threatened to freeze her bank accounts and put her in jail if she didn't pay.

"And the only thing going through my mind was 'Ok, my house will be taken away,' and imagining myself going to jail. I was just scared and mortified and I didn't know what to do but follow his instructions," So said.

Here's how it works: con-artists ask their victims to purchase MoneyPak cards, load them with cash, and then provide them with the code on the back. The scammers can then cash out without being traced.

"It's definitely growing," said Terry Lemons, chief of communications at the IRS. "What's really different about this one is the aggressive nature of the phone calls. People calling and threatening to bring out local police, threatening deportation. These are not things that the IRS does."

The IRS says victims, who are often immigrants or elderly, have lost more than $5 million since this sophisticated scam started. They say the original scam artists and several copycats mask their identity with false phone numbers from Los Angeles or Washington, D.C. Some calls even show up as "Internal Revenue Service" on the caller ID.

"What we have seen year after year at the IRS is these scams morph and they change and the scam artists move around, they are not easy to catch," Lemons said.