All too often, a taxpayer will file his or her income tax return and discover that someone else has already filed and received a refund under the taxpayer’s name. There are various measures that taxpayers can take to prevent identity theft and tax refund fraud. In Part I, we discussed the IRS IP PIN and its role in preventing tax return fraud. In Part II, we will discuss the most recent tax scams, what to look for to identify these scams, and what you should do if you think you are being targeted.
One of the more aggressive tax scams that is becoming more prevalent as of late is the IRS-impersonation telephone scam. Scammers claiming to be an employee of the IRS will call the taxpayer and tell them that they owe money to the IRS and that they must pay promptly through pre-loaded debit cards or wire transfers. Throughout the phone call, the scammers try to coerce the victims into disclosing their personal information, such as their social security number, or making a payment. Many times these callers are aggressive and rude, and may even be threatening. They will use fake names, may provide bogus IRS identification badge numbers, and may even alter the caller ID to make it look like the IRS is calling. If the victim refuses to cooperate, they are threatened with arrest or suspension of a business or driver’s license.
There are various versions of the reported phone calls, with many saying that they have made several attempts to reach the taxpayer and that this call is a final notice from the IRS. Many callers try to scare and threaten the victim, saying that the IRS is filing a lawsuit against the taxpayer, or that the IRS will be placing a lien on their assets and bank accounts. The scammers will often leave an “urgent” callback request if the phone is not answered. A sometimes less aggressive version of the phone call involves the caller telling the victim that they have a refund due and tries to persuade them to reveal private information. With any of the calls, the scammers may use the victim’s name, address, and other personal information to make the call sound legitimate.
When trying to determine whether you are being contacted by the IRS or being targeted by a scammer, keep the following points in mind:
1) The IRS will never call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.
2) The IRS will never demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
3) The IRS will never require you to use a specific payment method for your taxes, such as a prepaid debit card.
4) The IRS will never ask for credit or debit card numbers over the phone.
5) The IRS will never threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
If you encounter one of these calls, do not give any information and hang up immediately. Contact the Treasury Inspector General for Tax Administration and the Federal Trade Commission to report the incident. If you owe taxes or think you may owe taxes, contact the IRS at 800-829-1040 where IRS workers can help you, or seek the guidance from a trusted tax professional. If any request from the IRS ever seems suspicious, contact the IRS directly to verify the request. A tax professional can also help you navigate through situations if you feel you may need help.
Peter C. Golotko, CPA/PFS, MBA is President and CEO of CPS Investment Advisors. Leighann Davis, Portfolio Analyst at CPS Investment Advisors, is a contributing author of this article.
Sources: Internal Revenue Service