TAX SCAMS

Don’t Fall for Fake IRS Calls

Karen H. Johnson, CPA and Shannon K. Pennell

August 1, 2016

Is there anyone who has not yet received a fake IRS phone call?  Just a quick look at the Internal Revenue Service (IRS) website confirms what I think we all know—scam artists still find taxpayers to be very profitable victims.  The incidence of tax-related phone scams is on the rise, and they remained on the IRS “Dirty Dozen” list for the 2016 tax filing season.1

“The incidence of tax-related phone scams is on the rise and remains on the IRS’ “Dirty Dozen” list.”

For years, the IRS has declared that it does not contact taxpayers by phone to demand money and that any such calls should be reported as scams.  Although this is still true, Congress recently passed a law which has muddied the waters a bit.  In December 2015, President Obama signed into law a highway funding bill which includes requirements for the IRS to use private debt collectors to help collect what they can of billions in unpaid tax debts2—funds that could be put to better use improving the country’s highway infrastructure.

This new law greatly expands the Service’s authority and responsibilities regarding tax debt collection.   As a result, taxpayers need to be aware that, if they have already received correspondence from the IRS regarding a tax issue and are in the collection process, they may very well receive legitimate phone calls or emails from a collection agency.3

So how will you know which are legitimate calls and which are scammers?  Here are some suggestions from the IRS Summertime Tax Tip 2016-01 on how to distinguish between the two: 4

IRS CALLER - Will not call you about your tax bill without first sending you a bill in the mail. (Don’t throw away any notices from the IRS, and be sure you read them and pay attention to deadlines!)

SCAM CALLER – May refer to a letter or bill that the taxpayer never received or may not mention correspondence at all.

 

 

 

IRS CALLER - Will not demand that you pay taxes and will allow you to question or appeal the amount that you owe. (See link to IRS Taxpayer Bill of Rights in Additional IRS Links of Interest section below.)

SCAM CALLER – May demand payment with little explanation or recourse for appeal.

 

 

 

IRS CALLER - Will not require that you pay your taxes a certain way, for instance, require that you pay with a prepaid debit card or any specific type of tender. (See link to IRS Payment Options in Additional IRS Links of Interest section below.)

SCAM CALLER – May ask for checks or online payments to be made payable to an individual’s or private company’s account.

 

 

 

IRS CALLER - Will not ask for credit or debit card numbers.

SCAM CALLER – May ask for credit or debit card information over the phone.  DON’T GIVE IT TO THEM!

 

 

 

IRS CALLER - Will not threaten to bring in police or other agencies to arrest you for not paying.

SCAM CALLER – May threaten to involve local law enforcement or other authorities to have you arrested if immediate payment isn’t made.

 

 

 

IRS CALLER - Will not threaten you with a lawsuit.

SCAM CALLER – Often threaten immediate legal action or increased penalties if taxpayer doesn’t provide account information or payment.

 

 

 

You should also be aware that the following are NOT reliable indicators of either a real call or a fake call5:

  • Caller ID: Scammers routinely change their caller ID to look official.
  • Recorded message vs. live caller: Scammers are known to use both pre-recorded auto-dial messages and live callers, and it is likely that the genuine debt collectors hired by the IRS will use both as well.
  • Caller knowledge of your name, address and other information: Though a caller’s lack of this basic information suggests that they are a fraud, just because they have your information does not mean they are genuine. Scammers collect as much data ahead of time as possible, so they may actually have some legitimate pieces of information. Don’t let that fool you!

Ultimately, the best advice for avoiding fraud is to be cautious and not communicate by phone, fax, or email with anyone claiming to be an IRS authorized representative or collection agency unless:  a) you were already aware that you owed money, b) the amount given sounds reasonable, and c) you are confident that the representative or agency is legitimate.  If you think you owe but are not sure or have any doubts about the authenticity of the communication, do not respond.  Instead, call the IRS directly at 1-800-829-1040; they will be more than happy to give you the correct amount due!

For more information, check out the Additional IRS Links of Interest below.  These are just a sampling of the useful information you can find on the IRS website at www.irs.gov.  Visit it often and keep informed and safe!

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1. Phone Scams Continue to be a Serious Threat, Remain on IRS “Dirty Dozen” List of Tax Scams for the 2016 Filing Season (2016), https://www.irs.gov/uac/newsroom/phone-scams-continue-to-be-a-serious-threat-remain-on-irs-dirty-dozen-list-of-tax-scams-for-the-2016-filing-season (last visited Jul 30, 2016).

2. FAST Act, H.R.22, 114th Cong. § 32102 (2015).

3. Id.

4. IRS Says Be Alert for Tax Scams (2016), https://www.irs.gov/uac/irs-says-be-alert-for-tax-scams (last visited Jul 30, 2016).

5. Phone Scams Continue to be a Serious Threat, Remain on IRS “Dirty Dozen” List of Tax Scams for the 2016 Filing Season (2016), https://www.irs.gov/uac/newsroom/phone-scams-continue-to-be-a-serious-threat-remain-on-irs-dirty-dozen-list-of-tax-scams-for-the-2016-filing-season (last visited Jul 30, 2016).

ADDITIONAL IRS LINKS OF INTEREST

IRS Taxpayer Bill of rights (2016), https://www.irs.gov/taxpayer-bill-of-rights.

IRS Publication 4524.  Security Awareness for Taxpayers:  Taxes. Security. Together (2015), https://www.irs.gov/pub/irs-pdf/p4524.pdf.

IRS IR-2016-62 IRS Warns of Continued Scams (2016), https://www.irs.gov/uac/newsroom/irs-warns-of-continued-scams-and-varied-tactics-as-the-tax-deadline-nears.

IRS Report Phishing and Online Scams (2016), https://www.irs.gov/uac/report-phishing.

IRS Special Edition Tax Tip 2015-18 (2015),  https://www.irs.gov/uac/irs-urges-public-to-stay-alert-for-scam-phone-calls.

IRS Payment Options (2016), https://www.irs.gov/payments.