As if April wasn’t a busy enough month for tax confusion it also happens to be when the IRS has decided to start their new program of the collection of overdue Federal taxes using 3rd party, private tax collectors. In perhaps an ironic twist they believe that scam IRS phone callers are going to attempt to mask their activity in the confusing new landscape presented by this change.
First a bit of background to give you a glimpse at the bigger picture:
“Starting this month, the Internal Revenue Service will begin sending letters to a relatively small group of taxpayers whose overdue federal tax accounts are being assigned to one of four private-sector collection agencies.”
“The new program, authorized under a federal law enacted by Congress in December 2015, enables these designated contractors to collect, on the government’s behalf, unpaid tax debts. Usually, these are unpaid individual tax obligations that are not currently being worked by IRS collection employees and often were assessed by the tax agency several years ago.”
Here is how the standard case will proceed:
- IRS will send a letter to the taxpayer informing them that they’ve been assigned to a private collection agency (PCA).
- The private collection agency (PCA) will contact the taxpayer by mail confirming that they will reach out to the taxpayer
- Both the letter from the IRS and the letter from the private collection agency (PCA) will contain detailed information that will confirm the exact total tax debt owed
One more red flag, according to the IRS:
“Here’s a simple rule to keep in mind. You won’t get a call from a private collection firm unless you have unpaid tax debts going back several years and you’ve already heard from the IRS multiple times,” Koskinen said. “The people included in the private collection program typically already know they have a tax issue. If you get a call from someone saying they’re from one of these groups and you’ve paid your taxes, that’s a sure sign of a scam.”
Here are a few of the red flags that indicate a scam caller:
- Immediate Payment request: often they will request a specific payment method such as a prepaid debit card, gift card or wire transfer. This is an obvious red flag.
- Threats of local police or other authorities:
- Demand for payment without the opportunity to question or appeal the amount owed
- Demand for credit card payment or credit card numbers over the phone: Just say “NO!”
- Unexpected or demanding calls from someone claiming to be the IRS: a definite red flag
Here is a set of very useful links:
- Determine your balance due: www.irs.gov/balancedue
- Payment options: IRS.gov/Payments
- What You Can Expect When the IRS Assigns Your Account to a Private Collection Agency: Publication 4518 (.pdf)
- To learn more about the new private debt collection program, visit the Private Debt Collection page
- For more info: see the “Tax Scams and Consumer Alerts” page on IRS.gov.
Many of the people victimized are the elderly and people who do not know their rights or how to determine if a call is legitimate or not. If you have a family member or friend who is in tax trouble and would benefit from this article please share it with them.
No matter your political affiliation I think we can agree that paying our legitimately-owed taxes is what keeps America great. Giving money to phone scammers, often in overseas boiler room operations, is the least American thing we can do.