Recently, IRS scammers are increasing their sophistication. Here are some important tips to protect yourself.
2016 has seen a marked rise in phishing attempts, scammers posing to be the IRS attempting to exploit on people’s fear of owing the IRS.
The majority of these attempts typically come via a telephone call, demanding payment from taxpayers in non-traditional manners such as iTunes gift cards or prepaid Visa cards and threatening them with additional fines, levies or even jail time for noncompliance. The scammers are known to call multiple times and insist on payment in a very aggressive manner.
Often, the scammers inform the taxpayer they owe some sort of fictitious tax, such as a student tax or an Affordable Care Act tax, preying on people’s unfamiliarity with the tax code. Scammers have also been known to just simply say a taxpayer owes more income tax for a previously filed returns, and will use official sounding terms to intimidate their victim.
On September 22, 2016, the IRS released in alert showing these scammers are evolving in their sophistication and as a result becoming more adept at tricking people into paying them. Recently, the IRS noted, taxpayers may have begun to receive emails which look even more legitimate than IRS phone calls. These emails have been sending their marks a fictionalized version of a legitimate IRS notice, CP2000. A CP2000 notice is typically issued when there is an underreporting scenario, such as an omitted W-2 or investment statement on a tax return.
What makes this scam more frightening?
The general increase in sophistication and level of detail. The scam sends the notice via email, and includes a payment address to a PO Box in Austin, Texas (where the IRS does in fact have a service center for payments, but is for employment taxes) and requests the check be made out to the “I.R.S.” complete with a voucher. If anyone has ever owed the IRS for a legitimate CP2000 notice, these steps are very familiar.
When dealing with potential IRS issues, taxpayers should always keep the following tips in mind in order to avoid falling victim to these scams:
1. The IRS will ALWAYS first and primarily contact you via mail, not via email, social media or telephone.
2. Do not disclose any personal information to anyone that you do not know or trust, despite how official they may sound or pressure they may put on you.
3. Any IRS Notice will always have your Social Security number on the notice as well as a detailed explanation of your rights as a taxpayer and the assessment of the tax.
4. IRS payments will ALWAYS be made via check/money order, the Electronic Federal Tax Payment System or IRS approved credit card processors (found on their website). The payment will be made to the “United States Treasury.”
5. Although the IRS does ultimately have the power to arrest you or seize property in satisfaction, it is their policy to only do this as a last resort and only after a lengthy due process.
As these scams become more complex, taxpayers need to stay vigilant. If you think you may actually owe taxes, you should call 1-800-829-1040 and you can speak to an actual IRS representative who will confirm or deny any balance you have due on your tax account, as well as how to pay any balance and your options.
Edward McWilliams, CPA
Ed is a Partner in the firm’s tax and business advisory practice focusing on providing services to middle market private companies across different industries as well as to early stage startups. Ed has over a decade of experience providing tax and business consulting services to these companies of different sizes and across different industries, bringing a broad and diverse knowledge base and strategic solutions to the many complex issues that businesses face.