December 12th, 2016

We recently received a call from our client Julie. She was in full panic mode as a result of a phone conversation with the “IRS” and we couldn’t blame her. Late Friday afternoon the phone rang and on the other end of the call was a person who identified himself as calling with the IRS. They indicated their IRS employee ID number and proceeded to tell Julie that they were calling because of issues with a previous year’s taxes. There was an urgent matter involved with Julie’s old taxes and potential liens were about to be placed on Julie’s home as well as garnishment of wages. It was extremely convincing because the “IRS agent” on the other end of the call was able to verify Julie’s SSN on the phone as well as her date of birth. So what exactly did they want? Immediate payment. According to the IRS agent, Julie needed to make immediate payment over the phone in order to stop the tax lien and garnishment of wages.

Thank goodness for Julie’s quick thinking, she sensed that something was not right with this call. She politely asked for their number and said she would call them back. She hung up the phone and call us immediately. After discussing the issue with Julie, we were confident that this is was just another scam. Fortunately for Julie she did not provide any information to the caller. Unfortunately for a lot of other taxpayers, this is a scam that has been sweeping the country.

In fact, we just recently received the Internal Revenue Service warning to consumers about a sophisticated phone scam targeting taxpayers throughout the country.

Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In some cases, the caller becomes hostile and insulting. Some taxpayers have reported callers with heavy accents and may be hard to understand.

“This scam has hit taxpayers in nearly every state in the country. We want to educate taxpayers so they can help protect themselves. Rest assured, we do not and will not ask for credit card numbers over the phone, nor request a pre-paid debit card or wire transfer,” says IRS Acting Commissioner Danny Werfel. “If someone unexpectedly calls claiming to be from the IRS and threatens police arrest, deportation or license revocation if you don’t pay immediately, that is a sign that it really isn’t the IRS calling.”

According to the IRS, here are some other common characteristics of this new scam:

  • Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
  • Scammers may be able to recite the last four digits of a victim’s Social Security Number.
  • Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
  • Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
  • Victims hear background noise of other calls being conducted to mimic a call site.
  • After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

So how do you know if the caller is a scam? Well, for starters, the IRS does not make their initial contact by phone. Before you talk to anyone at the IRS, you will generally receive a letter by mail indicating the issue or potential audit. If a call is necessary, that letter will indicate your contact person’s name at the IRS office.

If you get a phone call from someone claiming to be from the IRS, here’s what you should do:

  • Take down their information and politely hang up. Do not provide them with any information.
  • Call your CPA or tax advisor. They should be able to quickly help you identify if a call is legit or related to a specific issue or year in question.
  • If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040. The IRS employees at that line can help you with a payment issue–if there really is such an issue.
  • If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.

Again, the IRS does not initiate contact with taxpayers by email to request personal or financial information. Unfortunately (or fortunately) the IRS currently doesn’t have a policy to communicate electronically with taxpayers. This includes any type of electronic communication such as emails and text messages (can you imagine getting text messages from the IRS while you are at a Friday night baseball game?). The first IRS contact with taxpayers on a tax issue will generally occur via US mail.

So be cautious of this and other types of scams. It may not be a bad idea to share this information with other family and friends who may be a target.

If you have not done so already, be sure to check out our book Tax Strategies for the Savvy Real Estate Investor. With over one hundred 5-Star Amazon reviews and close to 5,000 copies now sold world-wide, you will be sure to find some golden nuggets to help you save big on taxes.