There's one piece of tax advice we cannot stress enough: if the IRS calls you on the phone, hang up. Why? Because the IRS never will call a taxpayer--never. If the IRS wants to get a hold of you, they will send a letter to your tax address on official IRS stationary and ask you to call them.
IRS phone collection call scams are on the rise--we get at least one call a month from a client asking about a call from the "IRS" and what should they do. Thankfully they have a CPA to give them the confidence to ignore the call. Others are not so lucky--thousands of U.S. taxpayers are suckered out of millions of dollars each year by criminals domestic and foreign.
A recent bust by police in India has made headlines recently. They raided nine call centers in Mumbai and arrested 70 people who were calling phone numbers in the United States pretending to be Internal Revenue Service demanding payment for taxes. A police official said that another 630 people were also under investigation in the scam
“They would give an American name and a batch number and tell the [victim] that they owed the authorities $4,000, $5,000 or $10,000,” Paramvir Singh, police commissioner in the Mumbai suburb of Thane, India, told The Guardian [a British newspaper]. “They were instructed to stay on the phone and told that their homes would be raided by police within 30 minutes if they hung up. They made threats, they said: ‘You have to pay, otherwise you will lose your job, your money, your house.’”Victims were instructed to go to a nearby department store and buy a prepaid debit card that they would deposit the money on and then transfer it to a bank account in the U.S. The scam netted the operation approximately $150,000 a day, according to The Wall Street Journal.
The above arrests were a rare international success story. Although most domestic scam artists eventually get busted, the foreign scam artists...the majority of the criminals involved...are never brought to justice. And even criminals are arrested, most likely the taxpayers' money is gone forever.
One sure sign that a collection call from the "IRS" is a scam...payments are to be made via prepaid cards or wire transfers instead of navigating to irs.gov/payments. While the IRS will accept a credit card payment, check, or direct debit, they will certainly not express a preference for prepaid cards or wire transfers to a bank account of any kind.
Don't fall victim to a collection scam, whether by phone or even letter. Call us first before doing anything--you'll be glad you did.