With the start of tax season now just a couple weeks away, it is a good time to discuss an issue that anyone could find themselves facing: scams. Con artists and thieves continue to make a fortune each year by posing as IRS representatives on phone calls. They claim that the person owes money to the IRS and will be prosecuted if they don't pay immediately. They then instruct the person where to send these immediate payments (locations which are not affiliated with the real IRS).
According to the Treasury, approximately 736,000 complaints have been filed about IRS scams in just the last two years. Although fewer than 5,000 people have reported falling for these scams, those losses alone come to about $23 million.
Some fraudsters are successful because they manage to sound official and authoritative. In order to avoid being scammed, you should keep a couple things in mind. First of all, the real IRS rarely ever initiates communications over the phone. Instead, a letter will likely be sent out. Second, a real IRS agent would not threaten you or demand immediate payment. Finally, the real IRS would not request that payments be made via a prepaid debit card, wire transfer or through any other less-than-reputable means.
Unfortunately, there are now some complicating factors that could make it more difficult to distinguish between scams and legitimate IRS activity. Annual funding for the IRS continues to shrink, meaning the agency must do more with fewer resources. And despite IRS objections, legislators have recently passed measures forcing the agency to contract with private collection agencies. This could make it harder for taxpayers to know when they are dealing with scammers and when they are dealing with companies working for the IRS.
If you receive calls from anyone claiming to represent the IRS, please be extremely cautious before parting with any of your money. At the very least, search out IRS contact information online. Then, when someone calls you, ask for their credentials and contact information and check it against your own sources. If you call the IRS using numbers you looked up, a representative should be able to confirm whether the person contacting you is legitimate.