The recent IRS phone scams have been rampant for about a year or two now. The IRS has been advising taxpayers, many of them seniors, to ignore calls claiming to be from the IRS as this is generally a scam. The IRS said in previous years that it did not make phone calls so it would be impossible for the call to be from the IRS. However, under a new program announced recently, the IRS will begin to make collection calls through contracted collection agencies.
The IRS is one of the most important and least enviable federal agencies. It collects the revenue from many sources that permits the United States government to function in all of its operations. The IRS does so while facing resistance and reluctance by many individual and corporate taxpayers to pay their prescribed taxes. In thousands of cases around the United States, the IRS engages in lengthy and challenging battles against outright criminal tax evasion by many taxpayers, who are well-represented by some of the best lawyers money can buy.
Despite the expensive battles it must fight, the IRS, especially in its criminal enforcement functions, must fight in Congress each year to obtain adequate funding for its operations. Traditionally, Congress does not show much glee in appropriating funds for the IRS Criminal Investigation Division, despite the fact that IRS-CID, as it is known, is considered by many professionals as the finest financial investigative agency in the world.
The IRS CID and some of the other IRS units have been combating another threat that is criminal in nature and preys on thousands of unsuspecting victims who unwittingly cough up millions of dollars to faceless scammers who operate a very lucrative business and are elusive. This scam reported in Seasons previously involves a phone call and “is told that he or she owes back taxes. A stated amount must be sent immediately, the scammer says, or the senior will be arrested or face a lawsuit, bank garnishment or another disturbing event“.
IRS does its job with tools that Congress provided over time since 1913 when the federal income tax became law. Until now, IRS has resisted using one tool: calling taxpayers with outstanding federal tax debt by phone. But now that has changed, and IRS is about to deploy that tactic in the field of US tax enforcement.
IRS announcement of new procedures in April 2017
The IRS announced on April 4, 2017, that it would begin making a few tax collection calls to taxpayers who have unpaid tax obligations. As part of this process, the IRS, for the first time, will employ private collection agencies (PCAs) to help in this job.
As is expected, this new compliance tool will not only increase tax revenues but also open new ways that scammers can prey on victims by impersonating IRS officials or the PCAs.
Despite warnings by the IRS, law enforcement agencies, and consumer groups, many people fall victim to “IRS Impostor Scams.” According to IRS, the losses victims have suffered in these scams have reached more than $20 million. The entrance of PCAs to stimulate collections from delinquent taxpayers will make it difficult for taxpayers to distinguish between a real IRS call and one from an imposter.
How to distinguish bona fide IRS calls and phone scams
The IRS advises taxpayers who receive a call from a person purporting to be an IRS official or a PCA to take the following steps to distinguish between the real and the scammer:
- First, IRS announced that only the following four private sector firms might contact delinquent taxpayers on its behalf:
- CBE Group, Cedar Falls, Iowa
- Conserve, Fairport, NY
- Performant, Livermore, CA
- Pioneer, Horseheads, NY
LESSON TO BE LEARNED: Ask which company is calling. If it is not one of these four companies, it is probably a scam.
- If a taxpayer has a pending balance due, the IRS will mail written notices before the matter is assigned to a PCA, whose representatives will identify themselves. IRS says the PCAs will only call about a delinquent tax debt which the taxpayer already is known about for an extended time and has had prior contact from the IRS.
LESSON TO BE LEARNED: Have you received notices saying you have a balance due with IRS? If not, beware!
- If a taxpayer has a delinquent tax balance, one PCA will make contact, not all four.
LESSON TO BE LEARNED: If you are receiving calls from multiple companies, beware!
- Before the PCA contacts the taxpayer, IRS will notify the taxpayer by letter that the case has been assigned to a particular PCA.
LESSON TO BE LEARNED: Have you received a notice informing you that your tax matter has been referred to a private collection agency (a PCA)? If not, beware!
- The PCA will write to the taxpayer about its authorization from IRS to call the taxpayer.
LESSON TO BE LEARNED: Have you received a notice from the Personal Collection Agency saying that it is authorized to call you? If not, beware!
- The PCA will not ask for direct payment or for payment by money card.
LESSON TO BE LEARNED: Is the caller demanding payment by a money card or other immediate means? If so, it is probably a scam.
- The PCA is not an authorized tax enforcer and will not threaten taxpayers, the IRS assures.
LESSON TO BE LEARNED: Does the Personal Collection Agency threaten you with taking your home or other property? If so, it is probably a scam.
Taxpayers may verify their tax account balances directly. IRS says, “If taxpayers are unsure if they have an unpaid tax debt from a prior year – what the collection firms will handle – they can go to IRS.gov and check their account balance: http://www.irs.gov/balancedue.” If the taxpayer has a zero balance, there is nothing due. In these cases, the taxpayer typically wouldn’t be contacted by IRS or a PCA.
The valuable lesson from all this is that if the call is the first time you have heard from IRS, then it is reasonable to expect that it is a scam. IRS says “a taxpayer should not receive unexpected calls” because IRS “mails several notices before calling,” even when a PCA is assigned. If you are still concerned, make an appointment at a local IRS office to meet with someone about the issue. The local office can be very helpful in solving problems when a taxpayer is in a jam. In all cases, the IRS will provide the taxpayer assistance in English and Spanish at IRS.gov.
Here is a locator to use for finding a taxpayer assistance office: https://apps.irs.gov/app/officeLocator/index.jsp.
The IRS has other assistance tools to guide taxpayers on the new PCA procedures. Visit IRS.gov for details.
IRS has produced videos in English and Spanish that are available on YouTube about “Private Collection of Overdue Taxes.” https://www.youtube.com/watch?v=PuONAnr38Bk
Four PCAs authorized to collect unpaid individual tax debts
The new program, which was authorized under a Dec. 2015 law, enables the four PCAs to collect outstanding personal tax debts that are not being worked by IRS collection employees and were assessed by the tax agency several years before. IRS Commissioner John Koskinen said, “The IRS is taking steps through this effort to ensure that the private collection firms work responsibly and respect taxpayer rights…. In reality, taxpayers whose accounts are assigned as part of the private collection effort know they have a tax debt.”
The IRS says the new program began “with a few hundred taxpayers receiving mailings and subsequent calls” and that the program will expand “to thousands a week later in the spring and summer.” It says taxpayers with overdue taxes “will always receive multiple contacts, letters, and calls, first from IRS, not private debt collectors.”
IRS precedes the work of PCAs with a letter to taxpayer
IRS says it will send a message to the taxpayer and her or his tax representative informing them their account is “being assigned to a PCA and giving the name and contact information for the PCA.” It says it will also provide the taxpayer with IRS “Publication 4518, What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency.” https://www.irs.gov/pub/irs-pdf/p4518.pdf
No other collection firms are authorized to represent IRS.
Once the IRS letter is sent, the designated firm will send its own letter to the taxpayer and the taxpayer’s representative confirming the account transfer. To protect the taxpayer’s privacy and security, both the IRS letter and the PCA’s letter will contain information to help taxpayers identify the amount owed and assure taxpayers that future collection agency calls they may receive are legitimate. The PCAs will be able to identify themselves as contractors of the IRS collecting taxes.
Private firms not authorized to receive payments directly from taxpayers
The private companies may discuss payment options, including setting up payment agreements with taxpayers. But as with cases handled by IRS directly, any tax payment must be made, either electronically or by check, to IRS. A remittance should never be sent directly to a private company or anyone besides the IRS or the U.S. Treasury. Checks should only be made payable to U.S. Treasury. IRS provides information on payment options at IRS.gov/Payments. https://www.irs.gov/payments
No PCA is authorized to take enforcement actions against taxpayers. Only IRS can do that, such as filing a notice of Federal Tax Lien or issuing a levy. More information about the new PCA program can be found at Private Debt Collection page at IRS.gov.
Phone scams impersonate IRS officials
IRS reminds taxpayers to be vigilant for phone scams posing as PCAs. IRS says it will watch for schemes as the new program begins, including working with the tax community and law enforcement.
IRS says persons should follow “a simple rule”: “You won’t get a call from a private collection firm unless you have unpaid tax debts going back several years and you’ve already heard from the IRS multiple times. If you get a call from someone saying they’re from one of these (PCAs) and you’ve paid your taxes, that’s a sure sign of a scam.”
If taxpayers are unsure if they have an unpaid tax debt from a prior year, they can visit IRS.gov and check their account balance at www.irs.gov/balancedue. If the balance is zero, nothing is due, and there will be no contact by IRS or a private firm.
Even if a taxpayer’s account is not assigned to a PCA, the IRS warns of scammers pretending to be with IRS or a PCA. It says there are things scammers often do that the IRS and PCAs never do, including:
- Calls to demand immediate payment by a prepaid debit card, gift card or wire transfer. The IRS says it will first mail a bill to a taxpayer who owes taxes, and if the case is assigned to a PCA, the IRS and PCA will send the taxpayer a letter. Payment will always be required to be to the U.S. Treasury.
- Threaten to immediately bring in law enforcement officials to have taxpayer arrested for not paying.
- Demand that taxes be paid without giving the taxpayer the chance to question or appeal the amount.
- Ask for credit or debit card numbers over the phone.
The IRS.gov website gives more warning signs at “Tax Scams and Consumer Alerts.”
Taxpayers may settle IRS accounts online
IRS encourages taxpayers who are behind in their tax obligations to pay what they owe or set up a payment plan. Frequently, it says, taxpayers, qualify for payment options, including these:
- Most people can set up a payment agreement. IRS says those who owe a total of $50,000 or less in tax, penalties, and interest can use the Online Payment Agreement to set up a monthly payment plan for up to 72 months, even if they have not yet received a bill or notice from IRS. This Agreement requires no paperwork or a need to call, write or visit IRS. Qualified taxpayers can avoid the IRS filing of a Notice of Federal Tax Lien if it hasn’t been filed yet.
Taxpayers can also request a payment agreement by filing IRS Form 9465, which can be downloaded at IRS.gov and mailed with a tax return, bill or notice.
- Some taxpayers may also seek an “offer-in-compromise” if they qualify. This is an agreement with IRS that settles tax liabilities for less than the full amount owed. IRS reviews income and assets to see if the taxpayer is able to pay. To help determine eligibility, taxpayers may use the Offer in Compromise Pre-Qualifier, a free online tool at IRS.gov.
Koskinen warns that “interest and penalties on unpaid taxes add up quickly” and, thus, taxpayers should move promptly to contact IRS to resolve their tax delinquencies.
How to know if it’s really the IRS
Many taxpayers encounter persons impersonating IRS officials – in person, by phone and email. In general, if you do not know that you owe taxes you can probably count on this be one of many phone scams that is circulating the country. IRS says it initiates most contacts with taxpayers through regular mail delivered by the Postal Service.
Under special circumstances, IRS says it calls or comes “to a home or business, such as when a taxpayer has an overdue tax bill, to secure a delinquent tax return or a delinquent employment tax payment, or to tour a business” during an audit or a criminal investigation.
Even in these situations, taxpayers first receive several IRS mailed “notices.” IRS says it does not:
- Call to demand immediate payment using a particular payment method like a prepaid debit card, gift card or wire transfer. The IRS first mails a bill to any taxpayer who owes taxes.
- Demand that you pay taxes without the chance to question or appeal the amount they say you owe.
- Threaten to bring police, immigration or other law enforcement officers to arrest a taxpayer for not paying. IRS cannot revoke driver’s or business licenses, or immigration status. These threats are common tactics that scam artists use to trick victims in their schemes.
IRS officials present unique credentials when visiting taxpayers
If IRS visits, it always provides two forms of official credentials, a pocket commission, and an HSPD-12 card, which is a government document for secure and reliable identification for federal employees and contractors. Taxpayers have a right to see the credentials.
IRS collection personnel may call or visit a home or business unannounced to collect a tax debt. They do not demand that taxpayers make immediate payment to someone other than the U.S. Treasury. IRS can assign certain cases to PCAs but only after giving the taxpayer and his or her representative written notice. IRS.gov’s webpage Private Debt Collector provides more information about PCAs.
IRS employees conducting audits may call to set appointments, but only after a notifying the taxpayer by mail. After mailing a notification of an audit, an auditor may call to discuss the audit. IRS criminal investigators may visit a taxpayer’s home or business unannounced in an investigation but never request any payment.
Impersonators and phone scams: Not just by phone
Scams can come in calls, letters, and emails. IRS impersonators threaten or bully people into paying a phony tax bill, or even threaten arrest or deportation victims if they don’t comply. The IRS lists some recent scams and consumer alerts at IRS.gov.
Who to contact when phone scams occur
If a taxpayer is victimized by an impersonator or scammer or received a threat that seems like a scam, he or she should contact the Treasury Inspector General for Tax Administration. The taxpayer should use the “IRS Impersonation Scam Reporting” web page and can also call 800-366-4484.
Taxpayers can also report phone scams to the Federal Trade Commission’s “FTC Complaint Assistant” at FTC.gov. They should insert “IRS Telephone Scam” in the notes.
Unsolicited emails received by taxpayers that claim to be from IRS should be reported at email@example.com.
In February 2016, the IRS reported “a surge of phone scams as scam artists threaten police arrest, deportation, license revocation and other things.”
IRS chief advises, “If you’re surprised to hear from us, you’re not hearing from us.”
The IRS Commissioner John Koskinen said, “Taxpayers across the nation face a deluge of aggressive phone scams. Don’t be fooled by callers pretending to be from the IRS in an attempt to steal your money. We say if you are surprised to be hearing from us, then you’re not hearing from us.”
“The caller may threaten you with arrest or court action to trick you into making a payment,” Koskinen added. “Some… may say you’re entitled to a huge refund. These all add up to trouble.”
In January 2017, the Treasury Department’s Inspector General for Tax Administration (TIGTA) announced it had “received reports of roughly 896,000 contacts since October 2013 and have become aware of over 5,000 victims who have collectively paid over $26.5 million as a result of the scam.”
Self-protection is good advice
Scammers who aim to convince their victims to send money often leave “urgent” callback requests through “robo-calls” or a phishing email. Scammers often alter caller ID numbers to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badges to appear legitimate. They may use the victim’s name, address and other personal information to make the call sound official.
The IRS says there are certain things it never does. These things by themselves also will indicate if a taxpayer is dealing with a scammer:
The IRS will never:
- Call to demand immediate payment, nor call about taxes owed without first having mailed you a bill.
- Demand you pay taxes without the opportunity to question or appeal the amount they say you owe.
- Require you to use a specific payment method for your taxes, such as a prepaid debit card.
- Ask for credit or debit card numbers over the phone.
- Threaten to bring local police or other law enforcement to have you arrested for not paying.
If you know you owe, or think you owe tax, call IRS at 800-829-1040. IRS as they are devoted to helping taxpayers.
Seniors, in particular, are frequent victims of scammers and fraudsters. One of the best defenses is to know how they operate and to guard against their tactics. As former First Lady Nancy Reagan used to say in another context, “Just Say No!”
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