IRS to use private debt collectors amid huge telephone scam

Apr 05, 2017, 01:38

Scammers targeted thousands of Vermonters a year ago, and as tax day approaches (April 15) the assault is expected to become especially aggressive, according to Vermont Attorney General TJ Donovan.

The agency this week will start sending letters to a few hundred people informing them that their accounts are being transferred to private debt collection agencies. But Congress passed a law in 2015 requiring the IRS to restart the program.

Previous year alone, the IRS reported a stunning $458 billion average annual difference between taxes that were owed and paid, a 5.5 percent increase in what's known as the "tax gap".

Typically taxpayers receive scam emails created to trick them into thinking the messages are official communications from the IRS or others in the tax industry, including tax software companies, he explained.

Cheryl Willette got a call just last week from someone claiming to be from the IRS.

An independently reviewed study by the IRS found that IRS employees are three times more efficient at collecting taxes than private tax collectors.

If you have been notified by the IRS that a fraudulent federal return was received in your name, contact the Vermont Department of Taxes immediately at 802-828-2865.

For 26 years, Capstone's Volunteer Income Tax Assistance program has provided free tax preparation services by IRS-certified volunteers to thousands of lower income households.

You'll hear from the IRS first.

Only four groups are participating in the program: CBE Group of Cedar Falls, Iowa; Conserve of Fairport, N.Y.; Performant of Livermore, Calif.; and Pioneer of Horseheads, N.Y.

After the IRS sends a taxpayer a letter, the private firm assigned to the case will follow up with its own letter.

"One thing that Vermonters should know is you're not just going to receive a cold call from the federal IRS saying, 'We recalculated your taxes for the past six years.' It just doesn't happen".

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The private collectors will be able to identify themselves as contractors of the IRS.

The private collection firms' agents who work on taxpayer cases are not IRS employees.

Even though private firms will be contacting taxpayers, all payments should be made to the U.S. Treasury, Murphy said. All checks must be made payable to the "United States Treasury". To find out more about available payment options, visit IRS.gov/Payments.

The collectors also are not authorized to take enforcement actions against taxpayers (e.g., filing a notice of a federal tax lien or issuing a levy). To learn more about the new private debt collection program, visit the Private Debt Collection page on IRS.gov. And they "must be courteous and must respect taxpayer rights", according to the agency.

"Here's a simple rule to keep in mind". In Rhode Island, it's about 2,900 people with $2,906,000 waiting for them. "You don't want a preparer that is promising a large refund or basing their fee on a percentage (of the refund) because then they have an incentive to "create" some deductions that might lower your tax bill".

"We will never use a phone call to threaten to bring in the police or have someone arrested", Murphy added.

· Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.

Don't use your credit card to pay your tax bill.

Unlike private debt collectors, IRS employees have a variety of tools at their disposal with which they can help taxpayers facing financial difficulties meet their tax obligations. "If the IRS is seeking information, you're going to get a letter in the mail and it's going to state what information they need and why (the agency) is contacting you".

For many, the news comes just as people were becoming wary of crooks claiming to be from the IRS.

If you need help filing an extension, call up your local friendly CPA. Alternatively, taxpayers can request a payment agreement by filing Form 9465. The IRS looks at the taxpayer's income and assets to make a determination regarding the taxpayer's ability to pay.

When Willette expressed doubt over the validity of the call, she says the woman became very stern. "We have many programs created to help people who are having trouble meeting their tax obligations".

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