CSH’s Fred Francis, Senior Accountant, contributed to this article.
In the wake of repeated warnings regarding the IRS and phone scams (IRS Repeats Warning about Phone Scams), there are several important details the IRS is highlighting for taxpayers. At Clark Schaefer Hackett we’ve also seen an increase in calls to our offices from those who have been targeted and those with questions. In this article we detail information from the IRS and our own experience to keep you armed with the best information to protect yourself from thieves.
Per the IRS, “Taxpayers should remember their first contact with the IRS will not be a call from out of the blue, but through official correspondence sent through the mail.”
In addition, we’ve found that certain groups are targeted by the thieves, specifically: doctors, foreign nationals and those the thieves believe might be foreign nationals. Why? Doctors are targeted because of the high adjusted gross income and because they are typically late filers. Foreign nationals are targeted because the thieves are assuming they may be inexperienced in dealing with the IRS and be unfamiliar with IRS protocols. Others being targeted include anyone with a tax lien, whether with the IRS or state. Additionally:
- People who receive these calls are being threatened with a visit from the local police or sheriff. This is not an IRS practice. They are also threatened with repossession of vehicles; however, the IRS does not handle repossessions in this manner.
- The tactics are meant to scare people into paying over the phone via credit cards or revealing their checking or savings information. In reality, the IRS rarely accepts payments over the phone and prefers checks to be mailed.
- People who receive these calls are reporting that the callers often sound like they are calling from a busy call center. The IRS actually makes efforts to ensure its calls are private, and true calls from the IRS would not have extraneous background call noise.
The IRS also states:
“It is important for taxpayers to know that the IRS: Never asks for credit card, debit card or prepaid card information over the telephone; Never insists that taxpayers use a specific payment method to pay tax obligations; and Never requests immediate payment over the telephone and will not take enforcement action immediately following a phone conversation. Taxpayers usually receive prior notification of IRS enforcement action involving IRS tax liens or levies.”
For more information or to report a scam, go to www.irs.gov and type “scam” in the search box.
If you do need to make a payment to the IRS, make sure that you are doing so safely.
Stay informed on online payments and direct deposits
Online payments: While the IRS does not accept payments over the phone, there are several options available as alternatives to mailing a payment. Individuals can use the IRS Direct Pay system to pay while companies and individuals can utilize the Electronic Federal Tax Payment System (EFTPS). Both of these systems utilize checking or savings accounts. There are also several private companies that offer the ability to pay online through a credit card. The IRS has a listing of these companies on their website. It is our recommendation that if you choose to pay your taxes with a credit card, look closely at each company as they all charge various convenience fees for this service.
Direct deposits: Because of scams, the IRS is changing the way they direct deposit refunds, effective in January of 2015. The IRS will only direct deposit a limit of three refunds into one single bank account. Anything over three accounts will not be direct deposited and must be a paper check. This is to combat a trend where thieves are directing a large amount of direct deposits into one account. Per the IRS, “The direct deposit limit will prevent criminals from easily obtaining multiple refunds. The limit applies to financial accounts, such as bank savings or checking accounts, and to prepaid, reloadable cards or debit cards.”
Once you’ve filed and made your payment or received a refund, you still need to remain vigilant about protecting your information and identity.
Be aware of tax return identity theft
Typically, the term “identity theft” conjures an image of a criminal getting their hands on your Social Security Number and wreaking havoc with your personal or business credit. Indeed, this type of identity theft is a serious problem. But another tactic that has grown over recent years involves thieves invading the tax records of an individual or business. Tax-related identity theft jumped from approximately 52,000 incidents in 2008 to over one million in 2012, according to a 2012 report by the U.S. Government Accountability Office. While that’s a tiny fraction of the 145.6 million individual returns filed, the impact on taxpayers directly involved can be significant.
Read our article on Tax return identity theft: Not a victimless crime and view our webinar where CSH’s Fred Francis covers this important topic.