Tax debt and IRS collection methods are stressful. When Americans need help and compassion the most, scammers are ready to step in. Instead of administering much needed aid, they rob taxpayers of their time and money. The violation is unforgiveable, and yet, these companies often go without discipline. As the IRS and the U.S. Justice Department try to crack down on these thieves, learn about what to watch for and what you can do to avoid tax scams.
How to Identify and Avoid Tax Scams
Interaction with the IRS is just as much fun as going to the dentist. It’s an experience that most people hope will be fast and painless. Interaction with the IRS is almost always painless, although not often fast. For one thing, the IRS almost always initiates contact with you via the U.S. Postal Service. So, when a person calls you claiming to be with the IRS, it’s likely you’re dealing with a tax scam. This is especially true if they threaten to call the police unless you send gift cards as payment.
The IRS may not be compassionate but they’re not unreasonable. They limit their contact with taxpayers to written correspondence for the most part. Sometimes, it may be appropriate for the IRS to send representatives to your door during an investigation or audit. Furthermore, the IRS explains that these representatives are federal agents. They carry identification credentials and a badge. Ask to see this proof of identification before engaging in conversation.
More on How to Identify and Avoid Tax Scams
While in-person contact by scammers happens, the most common tax scams are conducted by phone, email and text. These communications alone are enough to point to a scam. However, further verification can be found in the sender’s poor command of the English language. U.S. Money News says, “Some IRS scams are based outside the country, and poor grammar, multiple typos or unusual wording is a red flag that the message or email is not an official IRS communication.”
Finally, avoid a tax scam by keeping diligent watch over all the transactions in your bank account. Don’t go on a shopping spree if the IRS surprises you with a $2,000 deposit. Unexpected deposits, especially from the IRS, should peak your suspicions. According to U.S. News, “If the deposit is followed by a contact from a supposed IRS agent requesting bank information or the return of the money, taxpayers can be assured they are the target of a scam. It could also be a sign that a fraudulent tax return has been filed in the taxpayer’s name.”
The old adage applies here: if it seems too good to be true, it probably is. Contact the IRS for peace of mind and alert your bank to the fraudulent activity. Taxpayers should actively monitor their transactions to protect their financial health from the risks that come with being a tax scam target.
When to Report a Tax Scam to the IRS and Federal Trade Commission
Most Americans have been through a frustrating experience with a service or business they’ve hired that didn’t quite deliver. But that doesn’t mean it was a tax scam to avoid. The difference between a scam and a business that doesn’t meet the expectations of their client is the intent. Therefore, knowing what to look for in a tax relief service can help you avoid a tax scam.
Let’s discuss the differences between a bona fide tax relief service and a tax relief scam. A tax relief company with valuable services designed to help consumers resolve their issue share a few commonalities. For example, a qualified service should boast credentialed tax professionals and a robust support staff. In addition, the firm offering the service should be open and available to its clients all year around. Above all, a wide array of services should be offered by the firm, as well. This allows the firm to apply for the best program that you’re eligible for.
For example, Offers in Compromise are a popular request from many taxpayers seeking relief, thanks to many over-promising ads. But very few taxpayers will be seriously considered for these programs by the IRS. Eligible taxpayers are in extenuating circumstances that will likely make them unable to pay their tax bill within their lifetimes. There is a variety of other programs available to the common taxpayer with great benefit and a path back to compliance with the IRS. Consequently, a good tax relief firm should have experience securing these options for the taxpayers they will benefit.
Does My Situation Warrant the Filing of a Complaint?
The Federal Trade Commission suggests filing a complaint with them or the IRS if one or more of the following occurs:
- A company promises that you will get relief from your tax liabilities.
- A tax relief professional misrepresents how long it will take to obtain relief from the IRS.
- A firm submits a tax return that omits relevant asset information on financial statements.
- Anyone promises any specific outcome.
How to Report a Tax Scam
Many people become suspicious of some communications immediately and are able to avoid a tax scam. The IRS provides step-by-step instructions for reporting suspicious emails, phone calls, and texts.
Emails: Perhaps their most noteworthy advice is to NOT open any email from a sender claiming to be the IRS. These frequently come with malware (malicious software) that will be installed on your computer immediately after opening. This allows the malware sender to access your sensitive information, including various usernames and passwords. The IRS suggests that you forward the email to them without opening, and then deleting it.
Phone Calls: The IRS asks that you provide a few things when calling to report suspicious phone calls. The most useful information includes the phone number that shows on your Caller ID, the phone number you were given to call back, and a short description of the conversation. If possible, the reporter should certainly include the name and badge number of the suspicious caller, the date and time that the call was received, as well as the location and time zone that you were in when you received the call, also.
Text Messages: To avoid a tax scam, resist the urge to click on the link in a text message from an unfamiliar number. Similar to suspicious emails, do not open it. Instead, forward the text message just as you received it, to the IRS reporting number. The IRS suspicious-text number is 202.552.1226. Immediately after sending the suspicious text to the IRS, text the originating number to the same IRS text line. Then delete the suspicious text.
In addition to notifying the IRS, the U.S. Department of Justice advises reporters to also file the report with the Treasury Inspector General for Tax Administration.
Common Tax Scams to Avoid
Tax scams have been a staple in IRS conversation for many years. In fact, they’ve become a risk to countless people who aren’t familiar with these dirty tactics. They’ve posed so much of a problem for consumers that the IRS produces annual lists of these scams dubbed the “Dirty Dozen.”
“Compiled annually,” the IRS says, “the “Dirty Dozen lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes.”
The Dirty Dozen
The Dirty Dozen tax scams to avoid are listed below:
- Phishing: Forbes describes how criminals use phishing to steal sensitive personal information that can be used to take your money, saying, “In many cases, bogus emails ask for specific personal information or try to get you to click on a link to install spyware or other malware on your computer.”
- IRS Agent Impersonator Phone Calls: These callers often threaten police involvement, deportation or other serious consequences. These tactics are certainly absent from the IRS procedures.
- Identity Theft
- Return Preparer Fraud: Tax return preparers should never encourage you to claim information that can’t be verified if you’re audited.
- Inflated Refunds: These are often offered by preparers who tie their fee to the amount of the refund they’re able to secure via fraudulent claims (see number 4.)
- Falsifying Information to Claim Credits
- Reporting False Information to Increase Deductions on Returns
- Falsifying Charitable Donations
- Reporting False Information for Business Credits
- Offshore Tax Avoidance: Forbes explains, “There are significant reporting requirements for offshore assets including FBAR (Report of Foreign Bank and Financial Accounts) filings and other forms relating to gifts, trusts, and foreign inheritances.”
- Frivolous Tax Arguments: Forbes offers the following examples including, “refusal to pay taxes on religious or moral grounds by invoking the First Amendment, claiming that only federal employees are subject to federal income tax, or declaring that only foreign-source income is taxable.” They further note that a $5,000 penalty may be applied for one of these examples, in addition to possible criminal prosecution.
- Abusive Tax Shelters: Any strategy that helps you avoid paying your fair share of taxes can get you into trouble with the IRS. Know the difference between these scams and legitimate tax planning.
Why Choose Tax Champions to Resolve Back-Tax Debt?
Tax Champions has been helping people with their taxes and tax resolution for over 35 years. We have an A+ rating at the Better Business Bureau with no complaints. If you think you may be the target of a tax scam, give us a call immediately at 800.518.8964. We can help you identify and avoid a tax scam and report it to the IRS. In addition, we’ll help you get back into compliance with the IRS, if applicable.
Call us today for your free case review or use the blue box on the right side of this page to send us your contact information. We look forward to hearing from you.
 Dirty Dozen. (2019, June 28). Retrieved from //www.irs.gov/newsroom/dirty-dozen
 Erb, K. P. (2019, March 27). Phishing Schemes Top List of IRS Dirty Dozen Tax Scams For 2019. Retrieved from //www.forbes.com/sites/kellyphillipserb/2019/03/27/phishing-schemes-top-list-of-irs-dirty-dozen-tax-scams-for-2019/#5d9c6aa03bc1
 IRS Provides Tips on Determining If It’s Really the IRS At Your Door. (2019, June 28). Retrieved from //www.irs.gov/newsroom/irs-provides-tips-on-determining-if-its-really-the-irs-at-your-door
 LaPonsie, M. (2018, March 22). 5 Signs of an IRS Tax Scam. Retrieved from //money.usnews.com/money/personal-finance/taxes/articles/2018-03-22/5-signs-of-an-irs-tax-scam
 Program to Shut Down Schemes and Scams. (2019, April 26). Retrieved from //www.justice.gov/tax/program-shut-down-schemes-and-scams
 Report Phishing: Internal Revenue Service. (2019, February 19). Retrieved from //www.irs.gov/privacy-disclosure/report-phishing
 Scam Alert: IRS Urges Taxpayers to Watch Out for Erroneous Refunds; Beware of Fake Calls to Return Money to a Collection Agency. (2019, June 28). Retrieved from //www.irs.gov/newsroom/scam-alert-irs-urges-taxpayers-to-watch-out-for-erroneous-refunds-beware-of-fake-calls-to-return-money-to-a-collection-agency
 Tax Relief Companies. (2018, March 14). Retrieved from //www.consumer.ftc.gov/articles/0137-tax-relief-companies