IRS scams are becoming way too common

FROM http://www.theindependent.com/

The call left on my answering machine was unnerving to say the least. The caller identified himself as an Internal Revenue Service agent, complete with a badge number or whatever they call it, and announced that I was the subject of a fraud investigation. He left a number I was to call back as soon as I received the message. It was all very official. Except it wasn’t.

Any hesitation, the voice warned authoritatively, would result in immediate consequences that could include arrest. In all my years of paying income taxes, I had never received such a threat. I haven’t done my own taxes in decades and I wondered why the accounting firm, a large prestigious one, I used hadn’t been consulted since my longtime preparer’s signature was on the return.

Before I dialed the number as advised in the terse “IRS” demand, I took the time to call my tax person to find out.

“Ignore it,” he said, “it’s a scam. These con artists are everywhere. The IRS doesn’t call you on the phone. They send a letter and give you a way to respond.”

Well, they used to, that is. The U.S. Congress in its infinite wisdom has decided to change all this. In the coming year, the IRS will be forced to use private agencies to collect outstanding inactive tax receivables, a method they have had trouble with in the past. While the IRS doesn’t call before issuing a letter, the legitimate private collectors do as well as those who aren’t — the scammers who have managed to bilk millions from vulnerable taxpayers.

Before you start condemning the often much maligned IRS, a favorite pastime for most Americans, the agency objected strenuously to the legislation that authorized the new procedure, pointing out among other things that taxpayers might have some difficulty discerning what was real and what was bogus when the calls come in.

Iowa Republican Sen. Charles Grassley, the self anointed congressional gadfly, who supports using private collection agencies, contends, somewhat naively, that the legitimate collection agencies should also send out a notification letter before making the call. But good luck on that since the legislation doesn’t require them to do so.

If you are lucky enough not to have received a scam call and aren’t familiar with the way the thieves operate, you probably should treat any tax demand, even those that now might be legitimate, with extreme caution. In fact, the Washington Post’s Joe Davidson quoted IRS Inspector General Russell George as warning taxpayers to be on “high alert” for fraud. As to the wisdom of that, the number of cases speak for themselves. Davidson cited Treasury figures showing that in two years ending in October there have been 736,000 complaints about scam calls and that approximately 4,550 victims have been bilked out of a total of $23 million.

How do the scammers operate? Well, they use a variety of techniques. Most prominent is to claim taxes are overdue and that a prepaid debt card or wire transfer must be used to satisfy the obligation. George was quoted as saying that if there is an unexpected call with a threatening message for instant payment, it isn’t the IRS.

The one I received as related above in the column was only the first. To be honest, I am somewhat embarrassed to say, I fumbled around with it, even redialing twice to the number listed and getting no answer on the first and a quick disconnect on the second when I asked whether this was the IRS. That, of course, was before I got smart and called by accountant.

Despite all that, I must have received a least four more such calls, similar but not identical to the first, with the now familiar threat of federal action pending against me. I figured so many scam artists wanted in on the action, they must have run into each other getting to the phones.

Individual aren’t always the victims. The Treasury itself has lost millions upon millions of dollars in false refunds paid to conmen over the Internet who have managed to steal the identities, including Social Security numbers, of taxpayers. Many of the phony refunds are for sizable amounts, $10,000 to $20,000. Since the economic downturn, the IRS has been urged to quickly process apparently without checking returns that claim large refunds.