Contact from the IRS
With the widespread proliferation of scams, tax professionals and taxpayers alike are continually reminded that the IRS won’t call to collect a past due tax. There are, however, special circumstances when they will pick up the phone.
It’s been repeated over and over that if you or your clients receive a phone call from someone claiming to be from the IRS and demanding money, it is likely a scam. In almost every case, this is true and all of us need to be wary of anyone calling and making such claims. However, there may be legitimate instances where the IRS will call clients, or unexpectedly show up on their doorstep. This can happen, but it’s rare.
The IRS initiates most contacts with taxpayers through regular mail delivered by the U.S. Postal Service. However, there are special circumstances in which the IRS will call or come to a home or business, such as:
• When a taxpayer has an overdue tax bill.
• To secure a delinquent tax return or a delinquent employment tax payment.
• To tour a business (for example, as part of an audit or during criminal investigations).
Even then, taxpayers will generally first receive a letter (or notice) in the mail from the IRS. Because the taxpayer should have received a letter or notice prior to any possible phone call, and presumably the taxpayer knows there is a delinquent debt, a phone call from the IRS should not come as a surprise. Note that:
• The IRS does not demand people use a specific payment method, such as a prepaid debit card, gift card or wire transfer. The IRS will not ask for debit or credit card numbers over the phone. People who owe taxes should make payments to the U.S. Treasury or review IRS.gov/payments for IRS online options.
• The IRS does not demand immediate tax payment. Normal correspondence begins with a letter in the mail, and taxpayers can appeal or question what they owe. All taxpayers are advised to know their rights as a taxpayer.
• The IRS does not threaten to bring in the local police, immigration officers or other law enforcement agencies to arrest people for not paying. The IRS also cannot revoke a license or immigration status. Threats like these are common tactics scam artists use to trick victims into believing their schemes.
Certain IRS employees may make official and sometimes unannounced visits to discuss taxes owed or returns due as part of an audit or investigation. Generally, taxpayers will first receive a letter or notice from the IRS in the mail. If a taxpayer has an outstanding federal tax debt, the IRS will request full payment but will provide a range of payment options—none of which include an iTunes card. Here are the facts:
• IRS representatives will always provide their official credentials (called a pocket commission) and an HSPD-12 card. The HSPD-12 card is a government wide standard form of reliable identification for federal employees and contractors. You have the right to see these credentials, so ask for them. IRS employees can provide an additional method to verify their identification. Upon request, they’re able to provide a toll-free employee verification telephone number.
• Collection employees won’t demand immediate payment to a source other than the U.S. Treasury.
• IRS employees may call taxpayers to set up appointments or discuss audits, but not without first attempting to notify taxpayers by mail.
IRS employees conducting criminal investigations are federal law enforcement agents and will never demand money.
Private Collection Agencies (PCAs)
The IRS began using the services of private debt collectors for certain overdue federal tax debts. The program, authorized under a federal law enacted by Congress in 2015 under the Fixing America’s Surface Transportation Act (FAST Act), enables these designated contractors to collect outstanding inactive tax receivables on the government’s behalf. Here are the facts about this program:
• The IRS will send a letter informing the taxpayer that his or her case has been turned over to one of the four PCAs. The PCA will also send the taxpayer a letter confirming assignment of the taxpayer’s account to the agency.
• The IRS will assign a taxpayer’s account to only one of these agencies, never to all four. The IRS authorizes no other private groups to represent the IRS.
• It’s important to know that PCA representatives (1) will identify themselves and ask for payment to U.S. Treasury, (2) will not ask for payment on a prepaid debit or gift card and (3) will not take enforcement action.
Remember to stay vigilant. Criminals continue to impersonate IRS employees and call taxpayers in aggressive and sophisticated ways. Imposters claim to be IRS employees and sound quite convincing. They use fake names and phony IRS identification badge numbers. They’re demanding and threatening, which does not reflect how the IRS handles enforcement matters.
Article reprinted with permission: “Contact from the IRS” by Cindy Hockenberry, EA, August 2018, TaxPro Monthly, v. 40 (8), p. 203.