Forbes

IRS Warns Taxpayers To Be Diligent As Identity Thieves Add New Twist To Phone Scam

11/7/14

For the past several years, the Internal Revenue Service (IRS) has been encouraging taxpayers to file their returns electronically. That's why it came as a shock to John* (not his real name) when he received a phone call (allegedly) from the IRS advising him that he needed to file his federal income tax return by mail. The reason? He was (allegedly) the victim of identity theft and as a result, he was not eligible to file electronically: the return and the payment were to be filed by regular mail.

That was the first of a series of communications (allegedly) from the IRS. A subsequent phone call purported to be from IRS Criminal Investigations (IRS-CI) and asked that John return the call to discuss the identity theft. He was also advised that he would be served with a summons at his home if he ignored these communications. The efforts to reach John were pretty persistent: at least once, IRS Criminal Investigations (allegedly) left a voice mail for John and asked that he call back immediately. John saved the message and played the call for me at his office. 

Despite the official sounding lingo, John figured out pretty easily that this was a scam. But it sure sounded real.

John isn't the only taxpayer that got these calls and letters. It's the latest in a series of scams aimed at taxpayers in an effort to steal your identity. And yes, it's a bit genius to try and steal your identity by alleging that they're trying to help you after your identity has already been stolen.

Identity theft is a big problem these days - and taxpayers are not immune from difficulties filing electronically once their identity has been compromised. When identical Social Security numbers show up in the system on different returns, those returns are flagged. The idea that your return could be flagged for something you didn't do isn't all that outrageous.

If your return is flagged due to a problem with Social Security numbers or alleged identity theft, the IRS will contact you. The initial contact, however, will most likely be by mail. It's unlikely to be a phone call - and if you did receive a phone call, you would not be directed to pay over the phone or send your return and payment somewhere other than an IRS Service Center.

And while the IRS is hopeful that you'll cooperate if you're the victim of identity theft - that's how they catch the bad guys - they're not going to issue a summons to you to compel you to come forward and discuss your case. If you do receive a summons from IRS (it happens), they're not going to call you in advance to let you know that they're taping it to your door. That isn't typically how a summons is served. The IRS doesn't typically issue a summons as a first step: you'll receive numerous opportunities in writing to respond to a valid claim by IRS prior to the issuance of a summons.

Of course, while IRS-CI does exist and does fight identity theft, they're tasked with enforcement efforts, not collections. IRS-CI has approximately 3,700 employees worldwide; about 70% of those employees are special agents who tackle crimes focusing on tax, money laundering and Bank Secrecy Act laws. It's important that IRS-CI be involved in these investigations because by law, IRS is the only federal agency that can investigate potential criminal violations of the Internal Revenue Code.

In some states, the IRS is working with law enforcement under a pilot program to fight identity theft. The program began in FL in 2012 and has since expanded to Alabama, California, Georgia, New Jersey, New York, Oklahoma, Pennsylvania and Texas. As part of this program, taxpayers are asked to share certain personal information, including their tax returns, with local law enforcement in an effort to assist with investigation and prosecution of identity theft. Since federal law prohibits the sharing of your tax information with third parties, taxpayers have to agree to allow IRS to release this information to local law enforcement: that's done using a specific form and is coordinated with IRS and law enforcement. Taxpayers will not be asked to release their information directly to a third party.

I asked IRS about this latest scam - there are so many at this point, it's hard to keep track. IRS is aware that it's happening and advise that "[w]e are working with TIGTA and have reported this latest twist in the scams." TIGTA is the Treasury Inspector General for Tax Administration - they're tasked with all aspects of work related to tax administration, including working to prevent fraud and abuse involving IRS - or allegedly involving IRS. You can find an entire page on their web site dedicated to IRS impersonation scams.

The IRS also reminds taxpayers be diligent as they work to "protect taxpayers from the ongoing trend of phone scams pretending to be the IRS." According to IRS, "As a general reminder, if the IRS suspects that you may be the victim of identity theft, you will receive a notice via mail. If you receive a notice from IRS, respond immediately, but we would caution taxpayers to avoid giving out personal information over the phone unless you are positive that you have the real IRS on the line. Keep in mind that the IRS does not take tax payments over the phone; however, we have a number of payment options on our website. Additionally, IRS Criminal Investigation does not collect payments of taxes. Taxpayers will find e-file is the safest, fastest and most secure way to file your taxes."

Of course, identity theft scams sometimes do work - and sometimes your identity really can be compromised. The IRS advises that "[i]f you believe someone may have used your SSN fraudulently to file taxes, please notify the IRS immediately. You will need to fill out the IRS Identity Theft Affidavit, Form 14039 (downloads as a pdf).

If you have previously been in contact with the IRS about an identity theft problem, and it has not yet been resolved, call the IRS Identity Protection Specialized Unit, toll-free, at 1.800.908.4490.

If you aren't sure that your identity has been compromised but you have reason to believe that you are at risk because you've lost your wallet or have questionable credit card activity, you'll also want to contact the IRS Identity Protection Specialized Unit (same number: 1.800.908.4490).

As tax season approaches (about two months left until the 2015 season kicks off), it's likely that these scams will increase, not decrease. And this latest scam shows that fraudsters are trying to stay above the curve by tweaking existing schemes. Even if the methods and scams change, the way that IRS does business remains steady. They won't ask you for personal information using email or social media as a first contact: your first contact with the IRS is usually by mail. The IRS won't ask for payment using a pre-paid debit card or wire transfer or ask for a credit card number over the phone.  

The IRS also does not ask for PINs, passwords or similar confidential access information for credit card, bank or other financial accounts. And the IRS won't use threatening language or claim that you'll be reported to other agencies such as the United States Citizenship and Immigration Services (USCIS) or local law enforcement.

If you receive a bogus call from someone purporting to be from IRS, you can report it to TIGTA at 1.800.366.4484. Try to remember as many details about the call so that the authorities can follow-up.

If you're ever suspicious about a call or other contact, trust your gut. Get a budget number from the person claiming to be from IRS, hang up and then call IRS back at their real number (1.800.829.1040) to resolve your tax matters. Don't be bullied into giving up personal information over the phone and don't become a victim.