November 21, 2019
Watch Out for Tax Scams!
IRS correspondence season is upon us. Every year around this time, the IRS sends out notices and bills, as do some con artists pretending to represent the IRS. We thought it would be helpful to cite several of the IRS’s guidelines on how to spot a tax scam. Feel free to share this information with family and friends if you believe they’d find it useful. And most importantly: if you receive a notice, bill, or phone call that you believe to be legitimate (or you’re not sure), call us immediately at 203‑967‑2231.
Last Chance for Year-End Tax Planning
While you’re reading the following tips, consider calling your advisor to find out which specific tax planning strategies are right for you as we wind down 2019. The changes you make now might make a significant difference to your portfolio—but only once you know what they are! The holidays will be here before you know it; call us at 203‑967‑2231 or email firstname.lastname@example.org to make your appointment now.
The following is from IRS Publication FS-2018-12, revised May 2018:
Avoid scams: Know the facts on how the IRS contacts taxpayers
Crooks impersonating the IRS either by phone, email or in person cost people their time and money. The IRS urges people to stay vigilant against schemes and scams and avoid becoming a victim.
Here are some important tips for taxpayers to keep in mind to avoid scams:
How the IRS initiates contact
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, or
- 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 sometimes more than one letter, often called notices, from the IRS in the mail.
Avoid telephone scams
Criminals impersonate IRS employees and call taxpayers in aggressive and sophisticated ways. Imposters claim to be IRS employees and sound very convincing. They use fake names and phony IRS identification badge numbers. They’re demanding and threatening – and do not reflect how the IRS handles enforcement matters.
Note that the IRS does not:
- Demand that 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. For people who owe taxes, make payments to the U.S. Treasury or review IRS.gov/payments for IRS online options.
- 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.
- Threaten to bring in 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.
IRS employees may make official, unannounced visits
IRS employees may make official and sometimes unannounced visits to discuss taxes owed or returns due as a part of an audit or investigation. Taxpayers generally will first receive a letter or notice from the IRS in the mail. If a taxpayer has an outstanding federal tax debt, IRS will request full payment but will provide a range of payment options.
Here are the facts:
- All IRS representatives will always provide their official credentials, called a pocket commission and a HSPD-12 card. The HSPD-12 card is a government-wide standard form of reliable identification for federal employees and contractors. Taxpayers have the right to see these credentials. 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 “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.
Avoid email, phishing and malware schemes
Scammers send emails that trick businesses and taxpayers into thinking the messages are official communications from the IRS or others in the tax industry. As part of phishing schemes, scammers sometimes ask taxpayers about a wide-range of topics, such as refunds, filing status, confirming personal information, ordering transcripts and verifying personal identification numbers.
The IRS does not use email, text messages or social media to discuss tax debts or refunds with taxpayers.
Calls from IRS-contracted private collection agencies
- The IRS will send a letter to the taxpayer letting them know the IRS has turned their case 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:
- Will identify themselves and will ask for payment to “U.S. Treasury,”
- Will not ask for payment on a prepaid debit or gift card, and
- Will not take enforcement action.
How to report scams
Taxpayers can use these options to report phone, email and other impersonation scams:
- Report impersonation scams to the Treasury Inspector General for Tax Administration. on the “IRS Impersonation Scam Reporting” webpage.
- Report phone scams to the Federal Trade Commission using the FTC Complaint Assistant. Add "IRS Telephone Scam" in the notes.
- Report an unsolicited email claiming to be from the IRS or an IRS-related system like the Electronic Federal Tax Payment System to the IRS at email@example.com.
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management
Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.
- Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
- Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
- The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
- All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
- The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
- The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
- Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
- The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
- The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
- International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
- Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
- Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
- Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
- Past performance does not guarantee future results. Investing involves risk, including loss of principal.
- You cannot invest directly in an index.
- Stock investing involves risk including loss of principal.
- The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
- Consult your financial professional before making any investment decision.
ADV & Investment Objectives: Please contact The Dowling Group if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account. Our current disclosure statement is set forth on Part II of Form ADV and is available for your review upon request.
It's a busy world. Our newsletter helps keep you tuned in to major market events, money-saving opportunities, filing deadlines, and other important information. One email per week and no spam — promise.Subscribe