Tips for recognizing the telltale signs of an IRS scam and how to report it
The Treasury Department and the Internal Revenue Service extended the federal income tax filing deadline from April 15, 2020, to July 15, 2020. That means that taxpayers could defer federal income tax payments, without penalties and interest, no matter how much they owed. This change applied to all taxpayers, including individuals, corporations, trusts, estates as well as those who pay self-employment tax.
But the IRS is currently issuing warnings to remind everyone that an extension of tax season is also an extension of scam season.
Tax Scams Affect Millions
We all think that we won’t become a scam victim, especially one that involves taxes or the IRS. But according to the IRS, the number of complaints they receive is increasing. In fact, according to the IRS, through February 1, 2020 the IRS received about 2.5 million complaints with a total financial loss of almost $80 million.
And the scammers are creative too, using the regular mail, email, texts and phone calls to not only steal millions of dollars but also steal personal information. But did you know that the IRS does not initiate contact by email, text, or social media channels?
Beware of IRS Impersonators
A recent scam involves thieves impersonating IRS officials – a federal offense punishable by up to three years in prison by the way. Sometimes the thief impersonates an IRS official over the phone, via text, through email or also by knocking on doors.
Worse, some IRS impersonators escalate the impersonations quickly and use threats in order to bully people into paying phony bills. They might also threaten to arrest or even deport those who don’t comply.
So, the IRS wants everyone to know how to determine whether a contact you receive is in fact from an IRS employee.
If the IRS Comes Knocking
Here are the exact tips copied directly from the IRS website:
“The IRS initiates most contacts through regular mail delivered by the United States Postal Service."
However, there are special circumstances in which the IRS will call or come 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 as part of an audit or during criminal investigations.
Even then, taxpayers will generally first receive several letters (called “notices”) from the IRS in the mail.
Note that the IRS does not:
• Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
• Demand that you pay taxes without the opportunity to question or appeal the amount they say you owe. You should also be advised of your rights as a taxpayer.
• Threaten to bring in local police, immigration officers or other law-enforcement to have you arrested for not paying. The IRS also cannot revoke your driver’s license, business licenses, or immigration status. Threats like these are common tactics scam artists use to trick victims into buying into their schemes.
Here is what the IRS will do:
If an IRS representative visits you, he or she will always provide two forms of official credentials called a pocket commission and a HSPD-12 card. HSPD-12 is a government-wide standard for secure and reliable forms of identification for federal employees and contractors. You have the right to see these credentials. And if you would like to verify information on the representative’s HSPD-12 card, the representative will provide you with a dedicated IRS telephone number for verifying the information and confirming their identity.”
What to Do if You Suspect a Scam
If you or someone you know suspects a scam, here’s what you do:
• Contact the Treasury Inspector General for Tax Administration to report a phone scam. You can also use their IRS Impersonation Scam Reporting at the Treasury Department’s website or call 800-366-4484.
• Report phone scams to the Federal Trade Commission. You can use the FTC Complaint
Your best defense is recognizing the telltale signs of a scam. And then reporting it.
If you feel like your long-term tax planning goals or Financial Life Plan could use a fiduciary and trusted partner, please schedule an Intro Call here!