Public warned about "ruthless" scammers posing as IRS agents

The Treasury Department issued a public service Tuesday warning taxpayers about phone scammers who claim to be IRS agents.

Last year, CBS News correspondent Chip Reid broke the story of the biggest phone fraud in IRS history. Since then, the number of people contacted by the scammers has almost tripled to almost a million people.

Massive tax scam: IRS warns of thieves posing as agents over phone

"They're just ruthless criminals and they really don't care about people, they don't care about anything other than trying to intimidate you into paying them money," said Tim Camus, deputy inspector general of the department, which oversees the IRS.

North Carolina Pastor Al Cadenhead said last year he was so scared he couldn't think straight.

It started with a threatening call saying, "Don't disregard this message... as delay in calling us back may end up in legal matter for you."

He did call back.

"This woman gave me her name and her badge number said that she was informing me that they were filing a warrant for my arrest. For tax fraud," Cadenhead said.

He did not believe he had done anything wrong, but the stakes were too high.

So over the next seven hours, he made multiple withdrawals from his bank and sent the money to his IRS impersonators with pre-paid debit cards - a total of $16,000.

Cadenhead is far from alone. In March of last year about 366,000 people had been called by the scammers; now, the number's exploded to more than 900,000.

The number of victims who lost money has gone from 3,000 to more than 5,000, and the total amount of money stolen has grown from $15 million to more than $26 million.

According to Camus, the scam started in India, but it's so profitable it has spread to copycats all over the world. The victims come from all walks of life.

"We've had doctors, engineers, lawyers fall for this scam," Camus said. "The tipoff is, if you don't pay immediately, you're going to jail. That is the tip off. The IRS would never make a telephone call like that."

So if you do get such a call - and the scammers may call multiple times -- Camus said you should just hang up.