In the past few years, scams capitalizing on new technology and legislation have proliferated. And there seems to be no shortage of tactics used to lure people into these traps. Phone scams involving callers purportedly to be from the Internal Revenue Service (IRS) are nothing new, but scammers are always looking for fresh ways to lure victims, and they are savvy in doing so. So, how does one keep from falling victim? Stay informed!
In December 2015, Congress enacted a federal law creating the IRS private debt collection program, allowing the IRS to contact individuals and businesses about payment for their overdue, unpaid federal taxes. While this program does a great job communicating with taxpayers, it has created opportunities for fraudulent activity. There have been many cases of scammers posing as federal agents or approved debt collection firms. In so doing, they can trick taxpayers into sending overdue tax payments to locations other than IRS headquarters. It is important that taxpayers and tax professionals are aware of such threats, as well as know what to expect from a legitimate private tax collector.
First, only four firms are authorized to collect on behalf of the IRS:
All tax payers will be assigned to one of these firms; any others are not affiliated with the IRS. All payments should be sent directly to the IRS. There is never a reason that one should be instructed to send a payment to a firm or any entity other than the U.S. Treasury or IRS. If a payment is made by check, it must be made payable to the “United States Treasury.”
There are also scams linked to payments made via the Electronic Federal Tax Payment System (EFTPS). The scammer requires immediate payment and claims a prepaid debit card is linked to the EFTPS, when in fact the scammer controls the debit card. EFTPS is a valuable resource, but like any electronic payment method, it should be used cautiously.
Second, legitimate collectors may identify themselves as IRS contractors, even though they are not directly employed through the IRS. However, these agencies will be subject to the same rules included in the Fair Debt Collection Practices Act. Therefore, the firms are not permitted to call individuals at work and are unauthorized to take enforcement actions against taxpayers. Any telephone calls to your work number from individuals claiming to be from the IRS should be handled with caution.
Finally, remember that the IRS will contact you or your tax representative before assigning a private collection firm. The IRS will not contact you through email, text messages, or social media channels to request personal or financial information. A letter including information about the firm that will be contacting you, as well as confirmation of legitimacy, will be sent to your home address. The IRS does not threaten taxpayers with jail or other enforcement actions. Any pressure from a collector that is unrelated to further late payment penalties should be regarded suspiciously.
Scamming strategies can be sophisticated and harmful. If you have any questions about IRS collection practices, or would like to request a speaker on this topic for your organization or event, contact one of our PYA executives below at (800) 270-9629.