Tax Season is Approaching ~ Learn Tips to Avoid IRS Scams

Tax Season is Approaching ~ Learn Tips to Avoid IRS Scams

As the tax season approaches, below is an article from AARP on what to watch out for with IRS scams.

In addition, join us to learn more on telemarketing health care fraud during our free webinar on Thursday 1/28 at 10 a.m. Tracey Thomas, Attorney with the Federal Trade Commission’s Bureau of Consumer Protection will discuss telemarketing health care fraud, including scams involving Medicare, the Affordable Care Act, prescription discount cards, and medical discount plans. She will also discuss new rules and restrictions recently added to the Telemarketing Sales Rule that can provide additional protection for consumers.

Coming Soon: IRS Private Debt Collectors and Scammers too!

With tax season kicking off this month, the IRS is gearing up. And you can be sure the scammers are gearing up too! And this year, you need to be aware of a new twist.

As part of the “FAST Act” (for Fixing America’s Surface Transportation Act) signed in law last month by President Obama, the IRS is now required, versus permitted, to use private collectors to help recoup owed tax debt. See Section 32102 of this five-year infrastructure spending bill.

As of last October, the Treasury Inspector General for Tax Administration already received 736,000 complaints about fraudsters posing as IRS agents who claim that back taxes are owed. Unless immediately paid by wire transfer or prepaid debit card, these scammers threaten arrest, deportation and seizure of property —  and already successfully swindled at least $23 million in two years. This IRS Imposter scam closed 2015 as the most reported ruse to our Fraud Watch Network Helpline (877-908-3360 toll-free) and others.

Since the scam first surfaced in October 2013, the IRS has repeatedly stressed that “we will not call about taxes you owe without first mailing you a bill.” But legitimate debt collectors do phone — along with scammers.

Although there’s no firm start date, private collectors are slated to start working on behalf of the IRS early next year. But at least for now, assume that any call from a self-described IRS private collector is, in fact, a scammer.

Here’s what to know if contacted about delinquent taxes by an IRS private collector:

  • Private collectors for the IRS cannot accept direct payments — all payments should be made to the U.S. Treasury. The agency will not require specific types of payments such as wire transfers or prepaid debit cards. Scammers prefer these methods because they are hard to trace and can be redeemed anywhere in the world.
  • Unless the IRS has an incorrect address, both the agency and its private collectors should first make contact by mailed letter. In a recent interview, IRS Commissioner John Koskinen told the Washington Post: “If you are surprised to be hearing from us, you’re probably not hearing from us because you won’t hear from us first by phone.”
  • Those who owe tax debt but cannot pay in full will be offered an installment plan for up to five years. If five years isn’t enough, “the collector asks for taxpayer financial information to see what sort of deal the taxpayer should get,” explains Robert W. Wood, who covers taxes and litigation for Forbes.
  • The same rules on other collectors apply: No calls before 8 a.m. or after 9 p.m. You must be sent a written “validation notice” telling you how much money you owe within five days after first contact. No harassing, abusive or threatening language allowed.
  • Certain tax bills (and therefore phone calls) cannot be handled by private collectors for the IRS: those for taxpayers who are deceased, under age 18, in a designated combat zone, or a victim of identity theft. Debtors currently in audit, litigation or criminal investigation are also off-limits to third-party hired guns.

Want to learn more about how to protect yourself from tax identity theft and other tax scams? On Tuesday January 26th at 2:00 PM (EST), tune into a webinar hosted by AARP Foundation Tax-Aide, AARP Fraud Watch Network and the Federal Trade Commission. Learn how tax identity theft happens, how to minimize the risk of becoming a victim, and what to do if you become a victim.

Go here to join the webinar and enter the event number 742 961 449 or listen in by calling (855) 242-0891.

You can protect yourself from con artists tricks by signing up for the AARP Fraud Watch Network. Receive free email alerts with tips and resources to help you spot and avoid identity theft and fraud, and gain access to a network of experts, law enforcement and people in your community who will keep them up to date on the latest scams in your area.

Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.