The ATO has raised concerns about the spread of an aggressive scam threatening taxpayers with arrest and legal action unless they comply with requests.

Hundreds of Australians have lodged complaints with the ATO after being told they had lawsuits against them and needed to settle their fake debt over the phone.

“They accused me of not paying up $4745 between 2008 and 2012,” Tenterfield woman, Lynda Christie said.

Ms Christie said alarm bells went off when the tone of the conversation became ugly.

“I was told not to talk, I wasn’t to talk – they were laying down the law.

“It wasn’t done nicely. It was concerning and I twigged it wasn’t quite right by the accent and I couldn’t get a word in.

“They told me the police are coming to arrest you. I said alright then let it happen.”

Ms Christie immediately contacted her daughter in law who suggested she ring Member for New England Barnaby Joyce’s Tamworth office.

“I was frightened and I imagine other people would find it frightening.

“He kept saying you listen to me and was going off his rocker – what’s going on in the world,” she said.

ATO assistant commissioner Thomas Ryan said the scam had spread and was deliberately targeting people around tax time.

“Basically, the scam attempts to force people to pay a fake tax debt over the phone by threatening arrest if they don't comply," he said.

“We certainly wouldn't threaten jail or arrest if you couldn't pay when contacted - nor would we demand that people load money onto a prepay card at the post office,” he said.

The assistant commissioner said those with suspicions should confirm the name and title of the call and then call the ATO switchboard to speak with that person.

“Finally, and most importantly, never send money or give financial details to someone you don't know or trust.”