Category Archives: Tax Scams

The IRS Is Using Private Debt Collectors Who Will Make Calls, but This Actually Changes Nothing

Sometimes fraud prevention can be boiled down to nice, simple rules that don’t leave much room for subtlety. Never wire money to a stranger. Just keeping that one rule in mind will keep you out of a lot of trouble, even if you forget the details of the scams that utilize the technique.

The IRS will never call you was another one of those hard rules, but as of 2017, it’s become a little more complicated. However, for the most part, nothing has really changed when it comes to fraud prevention.

Basically, the IRS will be contracting with four collection agencies, who will only be contacting certain taxpayers who have been delinquent for a significant period of time, whom the IRS has been unable to locate, and who meet certain other criteria. Furthermore, the collectors will not be demanding payments. Instead, they will be directing taxpayers toward electronic options for paying the IRS directly.

This means that some people will be getting calls from collection agencies on behalf of the IRS. The rest of the fraud prevention rules still apply: if they threaten you with incarceration or demand immediate payment, it’s a scam. If they’re talking about wiring money or loading up gift cards, it’s a scam.

Since con artists are nothing if not adaptable, I’ll add this point: if they do anything other than tell you about how you can pay the IRS directly on your own, it’s a scam. I’m sure someone is already gearing up to make calls claiming to be a collection agency, then telling victims they can pay over the phone with a credit card, with a wire transfer or with prepaid gift cards, or by visiting a fraudulent website. The collection agencies the IRS is using will not be asking for nor accepting payments from delinquent taxpayers. At all.

The actual website where you can pay your taxes, overdue or otherwise, is IRS.gov/Pay. And that’s pretty much the only thing the collection agencies contracted by the IRS are going to be allowed to tell you. Any mention of a different website to pay your taxes? Scam.

I recommend reading the full article below for more detailed information.

So wait, DOES the IRS ever call you?

One of my favorite mantras has long been, “If they’re calling you on the phone, it’s not the IRS.”

That’s because so many scammers use spoofed caller ID information to impersonate the agency to trick victims into wiring money or purchasing gift cards. The IRS uses letters when they need to talk to you.

Then I ran across this article from last year: IRS does sometimes call taxpayers.

Okay.

But, if you actually read the article (and please, always read the article and not just the headline), two things become clear. First, it seems the (very rare) phone calls were happening because agents were using old procedures that predate IRS impersonation scams, and the IRS is working to eliminate these types of first-contact calls.

Secondly, and most importantly, none of the calls were about the taxpayer owing money that needed to be paid immediately via wire transfer or gift card. The legitimate calls were made solely to schedule appointments to discuss an audit. No personal information was requested, no threats of arrest were made, no payments were demanded.

Now, just because they say they’re going to stop calling people (at least as a first contact) doesn’t mean change will be immediate. In a large organization, new procedures can be slow to implement. There may be an isolated incident here and there where an actual IRS agent calls a taxpayer about scheduling a meeting before a letter is sent. So I’ll amend the old mantra: “If they’re calling you on the phone and demanding money, it’s not the IRS.”

That should cover all the bases for now.

How to avoid tax season scams

This is an expanded version of a post I wrote last year. It’s a hot topic every winter/spring, so I thought it might be a good time to revisit.

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I’m going to amend an old saying right now: in this world nothing can be said to be certain, except death, taxes and tax season scams.

It happens every single year now, from January through April: tax-related scams absolutely run riot, from emails and phone calls to shady tax preparers and rogue employees.

There are some easy ways to keep yourself safe, though.

The IRS Will Not Email You

There is no scenario in which the IRS is going to send you an email. Even if you used online tax software to e-file your return, they are never going to contact you in this way if there’s a problem with your filing. They will contact you via telephone or, in most cases, use postal mail.

This is a vitally important point to remember. Do you know what the #1 email scam was in 2009? It was phishing emails designed to look like they came from the IRS. If you get one, forward it to phishing@irs.gov and help them fight these scams, and never open attachments in an unexpected email unless you want to be infected with spyware or to allow a criminal to access and control your computer.

The IRS Will Not Ask You to Verify Information

Even if there is a problem with your return, or you’ve been selected for an audit, the IRS is not going to ask you to “verify” your personal information. This goes for any mode of communication, electronic or otherwise.

Here’s the deal: they’re the IRS. They don’t need to ask you for your personal information. They already know who you are, when you were born and what your Social Security Number is.

Don’t Trust Caller ID

I’ve never even heard of anyone getting a phone call from the IRS, but my sources say it does happen. However, the time when you could implicitly trust caller ID is long gone. It’s easy to spoof a caller ID display using Voice Over Internet Protocol (VoIP).

If the caller ID says Internal Revenue Service, but they’re asking you to verify your personal information, bank account or credit card numbers, you’re dealing with a scam. Hang up immediately.

The IRS Keeps Pretty Normal Business Hours

In addition to being wary of caller ID, also know that the IRS isn’t going to call you on the telephone in the middle of the night.

This same rule goes for callers that claim to represent your banking institution. How many times have you seen a bank open at 3 AM? Not often. Phone calls at strange times are a sure sign of a scam.

Know Your Tax Preparer

If you’re paying someone else to prepare your tax return, only deal with people or businesses you know and trust. If it’s a friend or relative, make sure they know what they’re doing. It doesn’t matter who prepared your return—you are ultimately responsible for the filing.

Personally, I think it’s best to have a person you always go to. A couple years ago there was a case in Northwest Indiana where dozens of people had their identities stolen by some rogue employees of a national tax preparation company. If you’re not doing your own taxes at home, I recommend using a CPA you know personally (or can get to know over time).

Be Wary of Big Promises

When you’re shopping for a tax prep person or agency, be cautious of anyone making wild claims about the money they can get for you. Remember: you’re the one whose name and signature go on that tax return. If they put some giant fabrication on that form, and you sign it, that means you agreed it was accurate. You’ll be the one in trouble when you’re found out.

Tax Season Scams

Everyone’s favorite time of the year is coming up soon, so to protect yourself from scammers and identity thieves, here are a few quick tips to remember:

  1. The IRS is never going to initiate contact via email. Ever. Even if you filed your taxes online. If there is a problem with your filing, they will contact you via telephone or postal mail.
  2. If the IRS does contact you, they are never going to ask you to “verify” personal information such as your Social Security number, account information, credit card numbers or anything else. They’re the IRS; they already know what they need to know about you.
  3. If you do get a phone call, don’t automatically trust what pops up on caller ID, since this information can be easily spoofed. If they’re asking to verify personal information, it’s probably someone trying to steal your identity.
  4. On a similar note, beware of phone calls at strange times. The IRS isn’t going to call at 1 AM or 11 PM.
  5. If you’re paying someone to prepare your tax return for you, make sure you’re dealing with someone you trust and who knows what they’re doing. It doesn’t matter who prepares your taxes, you are ultimately responsible for what gets filed.
  6. Also beware of tax preparers who make wild claims about how big of a tax return they can obtain for you.
  7. Finally, a lot of large, nationwide tax preparation companies advertise a “service” in which they write you a check before your taxes are even prepared or filed, based on an estimate of what you will receive. While this is not a “scam,” know that these advances are loans, which you will have to pay back with interest. If they give you more than you get back from the IRS, the excess will come out of your pocket.

Like I’ve said before, just about anything can be turned into a scam. The best defense is to be prepared by knowing what to watch out for.

Lastly, If you do get a suspicious email, forward it to phishing@irs.gov. Don’t open any attachments, and don’t click on any links contained in the message. These could infect your computer with spyware or other malicious software.