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PILLA TALKS TAXES - Featured Article


 Simple Signs That You May be Targeted by Scammers 

It is for your defense and protection that I offer the Five Things Every Citizen Needs to Know About IRS Contacts. If you know and understand these five rules about how the IRS deals with the public, you will never be victimized by a phone call, e-mail or text message scam. Pay close attention to what I say here. 

In its interactions with the public, the IRS will NEVER  

1. Use e-mail or text messages for any reason. This is true whether the IRS is gathering needed information to process your return, to notify you of a tax audit, or to follow through with the collection of a delinquent tax. Even in cases where you have an ongoing relationship with a given IRS official, such as occurs in tax audit cases that might take many months to resolve, they will not do business through e-mail or text messages. The IRS will allow you to fax information to them (in which case a fax number will be provided either in writing or verbally from the agent personally) but the IRS will not interact through e-mails and text messages. If you think you owe the IRS money but are not sure, obtain your IRS transcripts directly from the agency. You can call the IRS’s Automated Collection Service directly at 800-829-1040 to do so, or consult counsel who can do so. That way, you’ll know precisely what you owe, if anything, and for which years. 

2. Call a person in the first instance while in the act of collecting taxes. In most cases, the calls made by scammers purporting to collect taxes are the first form of contact or notice that a person allegedly owes taxes. This will NEVER happen. If the IRS decides that you owe taxes without first conducting an audit (which is very possible and happens often), the agency will notify you in writing in the form of some kind of correction notice. See: The IRS Problem Solver. You have the right to respond and object to any such notice. If you are engaged in an audit, the case must be finalized before theres any assessment of tax liability. In that situation, you will discuss the matter with the auditor and potentially his manager and even an Appeals Officer if you decide to challenge the preliminary decision. See: How to Win Your Tax Audit. All of this happens well before any demand for payment is ever made. It is possible to deal with a tax collector, known as a Revenue Officer, via the phone. But even in that situation, such phone contact occurs only after a series of written notices and letters have been sent. Any letter sent by a Revenue Officer will give you his name and contact information, including a fax phone number. And the Revenue Officer will be based in a local IRS office, not some place in Washington because “the case was transferred.” In NO CASE will you be contacted by phone in the first instance by an actual IRS employee demanding payment in forceful and intimidating terms. 

3. Threaten to file a lawsuit if taxes arent paid today. If you have been delinquent on your taxes for more than a decade, AND if you have failed to respond to all the IRSs collection notices, AND if youve been working with specific tax collectors for years but have failed to pay, make arrangements to pay, or otherwise manage your tax delinquency, AND you have substantial equity in assets, it is POSSIBLE (though not LIKELY) that the IRS will sue you to obtain a judgment. This is a so-called section 7403 action, which I discuss in my book, TaxpayersDefense Manual. In such a suit, the IRS seeks to reduce its assessment to a judgment and then execute that judgment against your property. Chiefly, the IRS uses this tool to reach the equity in your personal residence because the agency is not allowed to seize your main home through administrative collection action. See: How to Get Tax Amnesty for my discussion of all assets and income that are exempt from IRS levy. Having said that, the IRS will NEVER call you on the phone (especially in the first instance; see point 2 above) to threaten a lawsuit. Even in cases where you have done one or more of the things I list in the first sentence of this paragraph, the IRS will NEVER call you to say that unless you pay x amount today, they will file a suit. Such discussions may possibly (but not likely) come up in your conversations with the Revenue Officer, but again, this will NEVER come in the form of a phone call from somebody youve never had contact with in the past. 

4. Demand that taxes be paid in a certain way. Even if you do owe taxes, and even if you are dealing with a Revenue Officer, and even if youve been interacting with that officer for some time, the IRS will NEVER demand that you pay taxes in a certain manner or by using a specific procedure—and most certainly will not take payment in the form of gift cards or PayPal credits! Moreover, the IRS will NEVER ask for debit or credit card numbers over the phone. For example, the IRS will not state that you must pay by debit card or wire transfer, and then ask you for the debit card number. You have the right to pay your taxes in any manner that you want, and at any IRS office thats convenient to you, including using the IRSs electronic payment system (EFTPS) on its web site. A sure sign of an absolute scam is a demand that you go to your bank “right now” to wire-transfer money, or to purchase a gift card. In fact, the IRS cant even take a payment via credit or debit card over the phone. To make a payment in such a fashion, you must go online to the agencys EFTPS system. Even in the case of a Direct Debit Installment Agreement (where the money is taken in monthly payments automatically from your bank account), this must be set up either with a Revenue Officer, Appeals settlement officer (through a Collection Due Process appeal), or the IRSs ACS toll-free phone numbers. The very fact that youre being asked to pay in a certain way right now—today—over the phone—is absolute proof of a scam. 

5. Threaten to arrest you if dont pay taxes today. People are naturally frightened by the IRS and are quite frightened by the idea of going to jail. And while it is certainly true that some people will end up in jail over their dealings with the IRS, the fact is, you have a better chance of being eaten by a shark than you do of going to jail for a tax crime. Thats why I have an entire chapter in my book, How to Get Tax Amnesty, entitled, “Am I Going to Jail?” In that chapter I make it perfectly clear exactly what kind of person runs the risk of going to jail and why. And even if you fit the profile described there of a person at risk of going to jail, the IRS will NEVER call you on the phone (especially in the first instance) and tell you that if you do not pay a certain amount of taxes right now, using a certain method of payment (see paragraphs 2 and 4 above), they will send a sheriff or the police out to arrest you immediately. If you are targeted for a criminal investigation, the IRS will contact you in person, in the form of a visit from two (not one) Special Agents. These are the IRSs criminal investigators. They will read you your “Miranda” rights, explaining that you have the right to counsel and that anything you say will be used against you. That is absolutely not going to happen over the phone. 


Keep these five rules in mind, and you will never be robbed by IRS impersonators. 

Article taken from February 2017 THE TAX SCAM Special Report  issue of "Pilla Talks Taxes."



Dan Pilla' monthly newsletter, Pilla Talks Taxes, features news stories and developments in federal taxes that effect your pocket book. Each information packed issue shows you how to use little known strategies to cut your taxes, protect yourself from the IRS, exercise important taxpayers' rights and keeps you up to date on the latest trends in Washington on the important subjects of taxes and your rights. You can't afford to miss a single issue!

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