Watch Out for Scams to Collect IRS Taxes Owed

Watch Out for Scams to Collect IRS Taxes Owed

Watch out for scams to collect IRS taxes owed as the bad guys are getting better and better at doing bad things, and the IRS is trying its best to keep up with them.  Over the last few years, the IRS has implemented tools to help fight the problem but, as with any criminal endeavor, the crooks see $$ and will do their best to try to take it.

The IRS just came out with some reminders related to the on-going problem and encourages individuals to watch out for scams.  These reminders are part of a new tax-collection program approved by Congress to retain the services of private contractors to collect past taxes owed by individuals.  Typically….and this is important…by the time they are sent to the private contractor companies, the IRS’ collection personnel have already made repeated efforts and the outstanding obligations are several years old.  This is important as the program does not appear to be structured to immediately be in contact with someone who has a more recent tax obligation….the IRS is typically using this program for delinquent accounts extending several years.

So, where there are collection efforts, especially from non-IRS personnel, is there a good chance that the bad actors will try to represent themselves to be legitimate “authorized” contractors…oh, I think you can count on it. (In fact, on a personal level, I had my own encounter that I almost fell for.  The bad guys were good.  I actually had a call that came up on my phone form the IRS…yes, caller ID said IRS…out of Portland, OR.  I initially fell for it.  Even though the IRS won’t call you unless they have made repeated efforts to reach you by mail, I initially got suckered in.  As probably most of you would, you see the caller ID saying “IRS Regional Office” and probably break into a sweat.  I even called the number.  Midway through trying to connect, it dawned on me…”I haven’t received any letter from the IRS, so why are they calling me?  And why from Portland?”  I immediately disconnected the call).

How Might You Know if a Scammer is Calling You?

Well, first, the IRS will not be sending delinquent accounts to the private collection agencies unless it is several years old and they have made repeated efforts to collect themselves.  Further, the IRS will send you a letter first informing you that your account has been forwarded to this third party company.  Then, the third party collection company will send you a letter on their letterhead as well explaining their role in trying to collect the debt.

But, what about the scammers being good at what they do, you get freaked out by the call and you do not remember if you owed any past tax bill?  As we said, if you have not received a letter from the IRS and the third party collection agency, you can probably be confident that it is a scam.  In addition, you can even go directly to the IRS website to see if you have any unpaid tax obligations.  As the IRS says, “here are some things that scammers will often do but the IRS and its contractors will never do”.

  1. Call and demanding immediate payment…typically through the use of a pre-paid debit card, gift card or wire. Regardless of whether the IRS (or third party) mailed you, payment will ALWAYS be to the US Treasury.
  2. The threat of arrest by local or federal agencies….hey, let’s face it…most people fear the IRS and getting a phone call threatening arrest would, understandably, be very unnerving (to say the least).
  3. Making an ultimatum on what you owe without even giving you the opportunity to ask questions or review with the individual what the tax is for (e.g., what year, why do I owe).
  4. Asking for credit or debit card account numbers over the phone.

Pro-Active Steps You Might Take if You Owe?

There are a couple of pro-active options the IRS encourages a delinquent taxpayer to look into.  On the surface, these programs seem very fair:

  1. Payment Plan — For individuals who owe less than $50,000 in past taxes, penalties and interest, they can look into qualifying for a payment plan to pay these obligations.  The plan can go up to potentially 72 months…and, you do not have to wait to hear from the IRS to sign up.  Check out the IRS’ online payment agreement.
  2. Just Plain Old Struggling?  — Ever hear the commercials, “Do you owe more than $10,000 to the IRS” (usually followed by some person saying, “I owed $42 billion dollars to the IRS and with the help of ABC, I settled for $5 cents (okay, dumb humor on my part, but you get the picture and have seen the commercials)? Well, I don’t know if or how this program fits with that, but the IRS does have an “offer in compromise” program for those individuals who want to do the right thing, but are struggling.  They even have a tool to see if you may pre-qualify for the program as well.  If you are in this situation, check it out.

As always, the information provided is intended to be educational in nature.  It is not intended, nor should it be interpreted as, any form of tax, legal, financial or investment advice.  Always consult with a respective professional in all such matters.