Update on Tax Scams
April 15th may have come and gone, but tax scammers never stop. Whether or not you have filed your return on time, tax scammers will use every trick at their disposal to scare you into sending them your hard earned cash. This post covers the various methods scammers use and how the IRS will contact you if there is a problem with your tax return.
First, how does the IRS contact taxpayers? The IRS will always attempt to contact taxpayers through the mail. The IRS initial communications generally will use one of many standard form letters that explain the purpose of the communication, what the taxpayer should do (usually pay some amount or file a return), and where to mail a response. In cases where IRS representatives visit a taxpayer in person at home or at a business, which is rare and for audit or criminal investigation purposes, the agents will provide official badges and taxpayers should request the agents verify the authenticity using a special IRS phone number. Even under such circumstances, taxpayers should have already received communications through the mail and if not, should contact the IRS directly via phone to verify the authenticity of the encounter.
The IRS never communicates with taxpayers through e-mail, texts or social media. Taxpayers should be wary of scammers sending emails asking to confirm certain personal information include tax return status, refunds, and personal information (e.g., social security numbers, birthdays, etc.) or using phony links that just deliver malware.
The most common method for scamming taxpayers is by phone. Taxpayers who stay on the phone with scammers because of specific requests or threats that may resonate with their personal situation are vulnerable to typical threats. These include threats of immediate action related to seizures of bank accounts, cars, homes and even executing phony arrest warrants. The IRS will not seize property without previously providing notice and warning of any impending seizure unless the taxpayer fails to take any action. Taxpayers can make these threats go away, of course, by sending cash payments to the scammer. Any payments for legitimate tax debts should only be made by check payable to the U.S. Treasury or by using the IRS payment link at IRS.gov/payments. You should never agree to make a payment while on a phone call with anyone who claims to work for the IRS. Scammers will sense uncertainty and continue a conversation with you until you send a payment or hang up. Always choose to hang up.
Finally, scammers may impersonate a collection agency that works on behalf of the IRS. The IRS hired four collection agencies to collect delinquent accounts due to its own budget cuts. Both the IRS and the private collection firm will send taxpayers a letter indicating the name of the collection firm and authorization by the IRS. When the collection agency calls, the representative will reference the letter and ask for payment to the U.S. Treasury. If you receive a call like this, you can still confirm your account status with the IRS and you should. The collection agencies cannot take enforcement action against taxpayers. They cannot seize property under a tax levy. They cannot foreclose on a tax lien and they cannot garnish your wages by contacting your employer. Their role is limited to working with delinquent taxpayers to collect unpaid taxes.
If you are contacted by someone attempting to collect unpaid taxes and without prior written notice, you should contact the IRS directly using their national phone number at 800-829-1040 to confirm your account status. If you have additional questions, feel free to contact me, a qualified tax attorney based in Detroit, Michigan, for a free consultation to discuss your tax concern.