As you already know, Congress recently passed the largest emergency financial stimulus package in the history of the United States. Officially called the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), this law provides, among other things, cash payments to Americans. The IRS will administer this process, which creates the potential for various tax scams.Continue reading “Coronavirus Tax Scams”
With your tax refund check excepted, no news is good news when it comes to the IRS. This means that for the most part, any communication received from the IRS is probably not a good sign. In fact, anytime you hear from the IRS, your heart will probably sink. That’s because you probably fear it’s the start of an audit, a request for back taxes or some sort of notice of an action against you.Continue reading “How Do You Know if the IRS Is Calling?”
When it comes to scams, they’re almost as inevitable as taxes. The only thing that changes is how the scams work. As taxpayers catch on to existing tax scams, con people look for different ways to trick their victims. Below we identify two of the newer tax scams that many taxpayers may not have seen before.Continue reading “Current Tax Scams of 2019”
Those who have read Lewis Carroll’s, Through the Looking Glass, may recall the Red Queen. This character explains to Alice that she must run as fast as she can merely to stay in one place. This is the origin of the Red Queen Hypothesis, which theorizes that living things adapt and evolve, not to gain an evolutionary advantage, but to survive. In other words, evolution doesn’t improve a species’ chances of survival, but prevents it from going extinct. Continue reading “Tax Scam Trends”
Wherever there’s money, there’s the potential for a scam. And there’s a lot of money in the federal tax collection process. Seeing the opportunity to make a dishonest buck, scammers use a multitude of schemes to trick innocent taxpayers into giving personal information. The scammers then use this information to steal money from the taxpayer or use the taxpayer’s identity to commit financial crimes. Don’t be a victim of phishing tax scams. Continue reading “Phishing Tax Scams to Watch”
As long as there are telephones, there will be people trying to use them to steal money from others. And given the power and fear the IRS strikes into many Americans, it’s no wonder the many telephone scammers decide to use the IRS as the basis for their scams. The following is an explanation of some of these more common IRS telephone scams and what can be done to help you or others from falling victim to them. Continue reading “Telephone Tax Scams”
The information required to prepare and file taxes is substantial. On an individual return, a full name, social security number, address and phone number are typically required. Then there are supporting documents that are either included with the return or are used to prepare the return. These include W-2 Forms, 1099 Forms and any other relevant documents, such as donation receipts. Continue reading “Identity Theft & Your Tax Information”
The saying “death and taxes” is incomplete. What it really should be is “death, taxes and scams.” For as long as an organized society exists, so will scams. This tax season has been no different, with many victims falling prey to unscrupulous individuals. Even though the vast majority of us have already filed our taxes for the 2016 tax year, that doesn’t mean the potential for tax scams is over until next season. One of the more prevalent tax scams still occurring is the IRS telephone scam.
How the Scam Works
The scammer will call the victim pretending to be an IRS agent or US government official. The call will often appear very legitimate, with the scammer providing a badge number to the victim, the victim’s caller ID showing the call as originating with the IRS and fake background noises played to make the victim think the spammer is calling from a busy call center.
With the stage set, the scammer tries to scare the victim into sending the scammer money because the victim has an existing tax debt with the IRS. Sometimes the scammer requests payment in an odd way, such as gift cards or money orders.
If the victim challenges the scammer’s claim that an unpaid tax bill is owed, the victim is threatened with arrest, a civil lawsuit, driver’s license revocation, deportation or other arbitrary punishments. In the current political climate, the threat of deportation will be especially effective.
Other ways the IRS telephone scam may appear genuine include:
- A follow-up telephone call from someone claiming to be from law enforcement.
- The scammer will have some basic information about the victim, such as a date of birth or the last four digits of the victim’s social security number.
- The victim may also receive a letter that appears to be from the IRS reminding the victim of an outstanding tax debt.
How the IRS Really Works
The IRS does try to collect its outstanding tax debts, but not in a manner used by most scammers. There are several methods the IRS will use when it attempts to collect an unpaid tax bill:
- The IRS will always provide the taxpayer with an opportunity to dispute the tax amount owed.
- The IRS will accept various methods of payment for a tax bill, not just one or two methods. Additionally, the IRS never asks for payment to be made over the telephone.
- The IRS may assign the tax collection duties to a private company, but there are only four private collection agencies authorized to represent the IRS: CBE Group, ConServe, Performant and Pioneer. Even if a taxpayer’s unpaid tax bill is assigned to a private collection agency, before a phone call is ever made, the IRS and the private collection agency will mail written notices to the taxpayer.
Scams Aren’t Just Limited to the Telephone
Variations of the IRS telephone scam can easily exist in other realms, such as e-mail. Many scammers will try “phishing” or pretending to be an official IRS e-mail or website in order to obtain personal information or money. The IRS may use e-mail to communicate with taxpayers, but it will never use e-mail as a method of first contact about an outstanding tax bill.
What You Can Do if You Think You’ve Been Contacted by a Scammer
While the use of scams to defraud people of their money is an unfortunate constant in our society, the means of employing a confidence trick has evolved with the times. One of many scams that exists today involves a con artist pretending to be an employee of the IRS and telephoning his or her victim, tricking them into sending the con artist money. We briefly described this scam in an earlier blog post, but in this blog post, we will explore the IRS telephone scam in more detail.
Details of the IRS Telephone Scam
The actual scam specifics can vary, but the main idea is to scare or intimidate a victim into sending the caller money on the basis that the victim supposedly owes the IRS an unpaid tax debt. If the victim doesn’t immediately pay, the victim is threatened with arrest, deportation, property seizure and/or a lawsuit.
Apparently this scam works, with over $23 million paid out by thousands of victims since October of 2013. And those that don’t fall for the con get dangerously close to doing so. Here are some of the ways the telephone scam can appear legitimate:
- The caller will identify him or herself as an IRS or US Treasury official. They will provide a name and may even provide a badge number.
- During the call, the caller will play a white noise recording in the background in order to mimic the sound of a call center.
- When the call is received, the victim’s caller ID will appear to show that the call is originating from the IRS.
- If arrest is threatened, but the victim doesn’t agree to send immediate payment, a follow up call may be made from someone claiming to be from law enforcement. The victim’s caller ID will often appear to show that the call is originating from the local police department.
- The telephone call may be preceded by an official-looking e-mail or letter claiming the recipient owes the IRS money.
- The caller may have some basic personal information about the victim, such as the last four digits of his or her social security number.
- The victim is sometimes provided with a real IRS mailing address in order to send certain paperwork.
Signs the Call Is a Scam
Luckily, there are many signs that the call is not legitimate. Some of these characteristics include:
- The caller demands immediate payment. The IRS will not expect payment without first providing an opportunity for the taxpayer to contest the amount owed.
- The call will be the first time the victim is made aware of money they allegedly owe. The IRS will always make first contact by mail.
- The victim is asked to provide a specific payment method such as a prepaid debit card or a money transfer. The IRS will provide multiple methods of paying any money owed.
- The caller asks for credit card information over the telephone. The IRS will never ask for payment information over the telephone.
- The victim is threatened with arrest if they don’t pay.
What You Can Do
If you have received one of these types of calls, the safest thing you can do is hang up. You can also report the call to the Tax Inspector General for Tax Administration or the Federal Trade Commission.