Private Debt Collection Program
Earlier this year the IRS moved forward with a controversial “Private Debt Collection” program. This program has had a shadow cast over it amid a sharp uptick in instances of fraudsters and scammers who pose as IRS Debt collectors. This ‘Private Debt Collection’ program was originally authorized under a federal law enacted by congress in December of 2015 and enables designated private collectors to collect unpaid tax debts on the IRS’s behalf.
Scammers Impersonating the IRS
Critics of the efforts to outsource debt collection have long warned that such programs provide opportunities to scammers. Be wary of a new phone scam in which victims will receive calls from people claiming to be an IRS representative. Callers were threatened with arrest, imprisonment, fines, and/or deportation if they did not pay money allegedly owed to the IRS. Victims who agreed to pay the scammers were instructed on how to provide payment, such as by purchasing stored value cards or wiring funds. According to the Treasury Inspector General for Tax Administration this phone fraud scheme has caused taxpayer losses of over $55 million and to date, and more than 50 individuals have been criminally charged for their roles in the scam.
Bogus Certified Letters Scam
Scammers are also being adopting more sophisticated tactics, the IRS is simultaneously warning taxpayers of a new phone scam that involves phony certified letters. In a press release entitled â€œIRS Warns of New Phone Scam Involving Bogus Certified Letters; Reminds People to Remain Vigilant Against Scams, Schemes this Summer,â€ the IRS cautioned taxpayers of the following:
The Internal Revenue Service today warned people to beware of a new scam linked to the Electronic Federal Tax Payment System (EFTPS), where fraudsters call to demand an immediate tax payment through a prepaid debit card. This scam is being reported across the country, so taxpayers should be alert to the details.
In the latest twist, the scammer claims to be from the IRS and tells the victim about two certified letters purportedly sent to the taxpayer in the mail but returned as undeliverable. The scam artist then threatens arrest if a payment is not made through a prepaid debit card. The scammer also tells the victim that the card is linked to the EFTPS system when, in fact, it is entirely controlled by the scammer. The victim is also warned not to contact their tax preparer, an attorney or their local IRS office until after the tax payment is made.
â€œThis is a new twist to an old scam,â€ said IRS Commissioner John Koskinen. â€œJust because tax season is over, scams and schemes do not take the summer off. People should stay vigilant against IRS impersonation scams. People should remember that the first contact they receive from IRS will not be through a random, threatening phone call.â€
EFTPS is an automated system for paying federal taxes electronically using the Internet or by phone using the EFTPS Voice Response System. EFTPS is offered free by the U.S. Department of Treasury and does not require the purchase of a prepaid debit card. Since EFTPS is an automated system, taxpayers wonâ€™t receive a call from the IRS. In addition, taxpayers have several options for paying a real tax bill and are not required to use a specific one.
Tell Tale Signs of a Scam:
The IRS (and its authorized private collection agencies) will never:
- Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. All tax payments should only be made payable to the U.S. Treasury and checks should never be made payable to third parties.
- Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
- Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
- Ask for credit or debit card numbers over the phone.
- Contacts you VIA email, text or social media to discuss personal tax issues
For anyone who doesnâ€™t owe taxes and has no reason to think they do:
- Do not give out any information. Hang up immediately.
- Contact the Treasury Inspector General for Tax Administration to report the call. Use their IRS Impersonation Scam Reporting web page. Alternatively, call 800-366-4484.
- Report it to the Federal Trade Commission. Use the FTC Complaint Assistant on FTC.gov. Please add â€œIRS Telephone Scamâ€ in the notes.
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