Human Resources and Law

Attorneys warn of increase in IRS scams

New law going into effect in spring 2017 could increase confusion for taxpayers.

October 14, 2016
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A rash of IRS scams has transpired recently, and two area attorneys said a new law going into effect in spring 2017 could make it harder for taxpayers to know if they are being targeted by a scammer.

Terry Zabel and Tim Dudley, attorneys with Rhoades McKee, said they’ve heard of scammers contacting individuals by phone, email or even snail mail and threatening them with foreclosure, criminal prosecution, seizure of assets or seizure of bank accounts under the guise of the IRS.

“Oftentimes, the taxpayers being targeted will have had some experience with the IRS,” Zabel said. “Maybe they will have had a tax obligation at one point that has resulted in a federal tax lien being filed.

“The fraudsters are searching the records of the Register of Deeds, and they find a tax lien. Maybe it’s been satisfied, but nonetheless, they know the person has had an issue with the IRS, and they use that information to try and get the taxpayer to send them money or information on prepaid debit cards.”

Dudley said the scammers are often sophisticated, sometimes using fake names, bogus IRS ID badge numbers, and sometimes, the information showing up on a caller ID looks like it’s from the IRS.

“It is really hard for people to discern if it’s a legitimate call,” Dudley said.

At the end of 2015, Congress passed a law mandating the IRS use private debt collectors to collect certain overdue federal income taxes, particularly on older accounts, which could increase the confusion.

“The problem we see is we are introducing another party into the conversation, one not related to the IRS that will be contacting taxpayers directly at the same time that these scams are so prevalent,” Dudley said. “More confusion is likely, and it could serve as another tool for the fraudsters.”

Dudley and Zabel said there are a few things people can do to ensure they don’t fall victim to an IRS scam.

Zabel said the first is to be aware the IRS usually sends up to three notices by mail when attempting to collect on a liability.

“If the taxpayer doesn’t receive those notices, if they simply receive a cold call by phone or possibly by mail, it’s unlikely the person contacting them is acting on behalf of IRS,” he said. “A taxpayer should have plenty of notice that their account is in collection.”

Zabel said under the new law, a taxpayer also will be notified their account has been turned over to one of four outside collection companies.

“If a taxpayer hasn’t received these notices, then they should be tipped off,” he said.

He also said the IRS only will collect money through the U.S. Treasury Department.

“If the person on the other end requests or demands payment over a debit or wire transfer or a payment to anyone other than to the U.S. Treasury, that is not something the IRS would do,” Zabel said.

Dudley added, “The IRS won’t immediately demand payment. You will have the opportunity to question the amount you owe or to appeal. The fraudster wants the payment immediately and will be pushing for it.”

For persons who think they are being targeted by an IRS scam, Zabel and Dudley said the best thing to do is to report it to the IRS.

They said reports can be made through the IRS website or an 800 number, also available on the website.

Dudley said tax time is a prime time for IRS scammers to target individuals.

“The IRS recently reported a 400-percent uptick in similar scams — phishing and malware — for the 2016 tax season,” he said.

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