A few days ago, I received a call from a panicked former
client. Two years back we had gone
through an IRS tax audit and worked out a reasonable payment plan to resolve
the remaining tax debt. The client had
been honoring all obligations of that payment plan: paying on time, filing on
time and not incurring any new debts.
The client’s immediate fear, however, was triggered by a call from a “US
Treasury agent.” That “agent” was
instructing my client to pay a fictional the balance due by cashier’s check before the end of the day. A failure to do
so would mean that local law enforcement would come to his home to arrest him.
My client is sophisticated.
In the past, we had spoken about what the IRS can do and what it
cannot. He suspected it may be a scam,
but was still worried that the “agent’s” threat to arrest him might be
true. It wasn't. The IRS does not act this way.
The IRS will NEVER call and threaten you with arrest for the
non-payment of taxes.
The IRS doesn't have the power or authority to arrest someone
for being unable to pay. Sure, if you commit
tax fraud you can go to jail after a thorough investigation. But, being
unable to pay is not fraud.
What my client was dealing with was a pervasive telephone
scam that remains on the IRS “Dirty Dozen” list of tax scams. Someone pretending to
be from the IRS calls to demand payment of taxes. The caller may even have certain personal
information that appears to lend credibility to any threats they make. On occasion the victim follows the instruction
and sends money.
A big part of the problem is the mystery surrounding the
power of the IRS and the procedures that must be followed before the IRS can do
something. It’s true that the IRS can
file liens, garnish wages, levy bank accounts and even seize property when
trying to collect a tax debt. However,
there are a number of notices that have to be issued and appeal opportunities
that exist before they are able to do so.
You will receive letters (some by certified mail) before they can take
anything from you. They must follow these notification procedures. Putting you in jail
for non-payment is not one of those procedures.
If you receive a call from someone claiming to be from the
IRS, know that the IRS will never:
·
Call to demand immediate payment, nor will the agency call about
taxes owed without first having mailed you a bill.
·
Demand that you pay taxes without giving you the opportunity to
question or appeal the amount they say you owe.
·
Require you to use a specific payment method for your taxes, such
as a prepaid debit card.
·
Ask for credit or debit card numbers over the phone.
·
Threaten to bring in local police or other law-enforcement groups
to have you arrested for not paying.
If you do receive a call, you can file a complaint with the FTC
through the FTC Complaint Assistant. You can also contact the IRS or a tax professional to discuss whether you do owe an unpaid tax debt.
The IRS is working to get out information on this scam and have posted the following on their website:
The IRS is working to get out information on this scam and have posted the following on their website:
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