How to Recognize an IRS Tax Scam - and What to Do if the Tax Due Notice is Real
Hearing from the IRS is bad enough but being contacted by a scammer posing as the IRS is even worse, or at least just annoying and frightening. IRS scams are everywhere these days, and they take many different forms. Even sophisticated taxpayers have been fooled by these fakers, sometimes losing thousands of dollars in the process.
If you do not want to be the next victim, you need to educate yourself about how these scams originate, what forms they take and how the perpetrators prey on an inherent fear of the IRS.
Here are some warning signs to look out for when someone claiming to be from the IRS comes calling.
1. The tax bill comes out of the blue. Notices of taxes due are rarely surprises. If you have always paid your taxes on time, a past due notice or other scare tactics should be met with skepticism.
2. The "agent" threatens to have you arrested. IRS agents are scary, but they will not threaten you with arrest or imprisonment before the audit process has even begun.
3. You are offered relief in exchange for immediate payment. The process of paying overdue taxes and resolving tax disputes is long and complicated. Offers of immediate settlement are common signs of a scam.
4. The caller asks you to pay your bill with gift cards. The IRS does not accept iTunes gift cards or prepaid phone cards as payment for taxes due. If the "agent" on the other end of the line asks for these payments, just hang up.
5. You receive a phone call or a message on your cell phone. The IRS does not use phone calls as a primary means of communication. If you are not in current negotiations with the IRS, the tax agency will never call you.
6. The communication comes via email. If you owe money to the IRS or the agency has questions about your return, they will contact you via U.S. mail. Notices of tax due that come in the form of email are always scams - and the emails themselves often harbor dangerous viruses and other malware.
Now that you know how to spot an IRS collection scam, what happens if the communication is real? What should you do if you do receive an old fashioned snail mail notice saying you owe additional taxes? Here are some key steps to take if that dreaded letter shows up in your mailbox.
Contact A Tax Resolution Professional
If you owe back taxes to the IRS, there are some definite benefits to hiring a tax resolution service. These companies exist for a reason, and they can provide a way out for taxpayers who feel overwhelmed by the whole process.
Negotiating with the IRS on your own can be intimidating, and the tax agency may not offer you the best terms. Tax resolution services are used to dealing with the IRS, and more often than not they can get you a better deal.
Verify Their Contact Information or Contact the IRS Directly
While it is uncommon, some scammer is using the U.S. mail to perpetrate their schemes. Before you write a check, contact the IRS and make sure the communication is legitimate.
You should look up the IRS phone number at their website irs.gov, instead of simply calling the phone number in the letter you received. If the letter is a scam, the phone number provided will send you to the perpetrators of the fraud. If you want to know the truth, contact the IRS directly.
Think About How Much You Can Afford to Pay
Paying a huge tax bill is sure to be a burden, even for middle and upper-class taxpayers. If you know you cannot afford to pay the entire amount due, think about how much you can pay, either in monthly installments or all at once.
The tax agency is often willing to work with taxpayers to pay off the amount they owe, and payment plans are common. If you plan to go this route, it pays to seek professional help - an experienced tax resolution expert can help you work out a compromise or payment plan you can afford.
Take Interest and Penalties into Account
If you receive a notice of additional taxes due, time is of the essence. Once that notice goes out, the clock starts ticking, and interest and penalties can add up fast.
The sooner you act, the sooner you can start to settle your obligation, so you can set your mind at ease and get on with the rest of your life. No one likes to owe money to the IRS, and simply being contacted can be enough to set your heart pounding. If you do find yourself in such a situation, it pays to act fast - and seek the help of an experienced tax settlement professional.
If you want an expert tax resolution professional who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.