Tax scams are so prolific that the IRS regularly sends tips out about them.  This isn’t surprising.  One of America’s most notorious bank robbers, Willie Sutton reportedly responded to a reporter’s question about why he robbed banks, “because that’s where the money is.”  If you understand the simplicity of that statement, you can see why scam artists will attempt tax related scams.

Many people are afraid of the IRS and their reputation for ruthless efficiency, often embellished by ordinary people who have either had a bad experience with the world’s largest collection agency or have heard stories from others.  Given the reputation of the IRS, and a general lack of knowledge of how the IRS operates, a lot of folks will be more open to such a scam out of an abundance of fear.

Just like with attacks on your computer systems, scammers are constantly coming up with variations on the theme, but they generally have a common theme.  The taxpayer owes the money and if they don’t pay right now, with their credit card, the police are ready to kick in the door.  How does a taxpayer know if contact from the IRS is real or not?  After all, we all know that ignoring the IRS is a very bad idea.

Here is some information that all taxpayers will find helpful.  This information is culled from IRS Tax Tip 2019-87, other publications and years of experience helping taxpayers. 

Phone Scams

The IRS generally doesn’t initiate a call.  If the IRS calls, they are returning a call.  They do not leave pre-recorded, urgent or threatening messages. Just like robocallers, scammers can “spoof” (fake) a number to fool caller ID.  If they do reach a person, scammers will make threats and demands and requirements for payments. 

All IRS collection personnel have badge numbers.  When one calls the IRS and reaches a person, (as opposed to the automated system), that agent will always identify themselves by name and badge number.  They are required to do so.  Keep this in mind.  All calls to the IRS are recorded and subject to review.  Taxpayers who know their rights (see my blog “Taxpayer Bill of Rights”), should recognize these as scams.  Knowledge is power.

Email Phishing Scams

The IRS doesn’t initiate contact via email.  The IRS has a set procedure established by Internal Revenue Code section 6304.  This section gives specific guidance as to what they can and cannot do in contacting taxpayers.  The IRS usually initiates contact with a letter.  The letter will have specific instructions and timelines. 

As a side note, IRS agents can come to a home or business uninvited while conducting investigations or to collect a tax debt, but they will have two forms of official credentials. The representative will give you a number to verify their identity.  They can not demand you make a payment to any source but the U.S. Treasury. 

What to Do

Knowledge is your best protection.  Make sure you have filed your returns.  If you receive a letter from the IRS, don’t ignore it.  Open it, read it and seek professional help if you don’t understand it.   

The IRS would like you to report calls to them using their reporting page (https://www.treasury.gov/tigta/contact_report_scam.shtml) or call 800-366-4484.   The IRS asks you to forward any phishing emails to phishing@irs.gov

I recommend that if the phone rings and a caller claims they are from the IRS, just hang up.  Don’t engage them.  If you chose to call the IRS for any reason, go to irs.gov and verify the number to call.   If you get an email that you think may be a phishing email, either forward it to the IRS or simply delete it.  Please do not open any attachments (which may contain malware), click links or reply.  Part of the phishing scheme is to see if someone will respond.

Taxes are an inevitable part of life in America today.  They are the way we fund government at all levels.   The law requires taxpayers pay the taxes due based on the code at that time.  In the process of collecting the information for assessing tax liability, financial and identity information is collected. 

The IRS has been hacked and continues to work to protect taxpayer information.  However, you are your best defense.  Protect your identity and your financial information with a healthy skepticism.  If desired, there are companies out there who can help.  Tax scams are popular among criminals because they work.  You have the power to refuse to be a victim and you are not alone.  Gain knowledge and ask questions.