Phone Calls from the IRS: Proceed with Caution

Imagine this scenario: you’re sitting at home and the phone rings. You answer, only to be told that the caller on the other end is an IRS agent who needs to speak with you urgently. Your caller ID might even seem to verify that the IRS is calling. But, don’t be too quick to hand out information, such as your

Social Security number or your credit card number. More often than not, phone calls from the IRS aren’t really from the IRS at all, but from scammers. Here are some warning signs of a fraudulent caller that can keep you from getting tricked.  

Warning Sign #1: You’ve Had No Prior Communication  

The first thing to think about is whether or not you’ve had any recent contact, via official mail, not email, with the IRS. If you haven’t, then you’re likely not talking to a real IRS agent. The IRS handles almost all of its communications via regular postal mail. They typically won’t call you to tell you that you owe money or anything of the sort. And, they definitely won’t call you out of the blue without any prior notice. If you’re still unsure, tell the caller you’d prefer to hang up and to dial the official IRS number for yourself. If they protest, do it anyway! The real IRS cannot penalize you for protecting yourself in this way.  

Warning Sign #2: You’re Asked to Pay in an Odd Way  

You can also tell if you’re dealing with a scammer if they demand you pay a tax bill immediately and in a nontraditional way. Most scammers will order you to head to your local Western Union to send a wire transfer or to buy a prepaid debit card and give them the numbers. That’s definitely not legitimate as the IRS only accepts funds via official online or mail-in payment options, which are detailed on their official website.  

Warning Sign #3: You’re Threatened  

The way that scammers trick most people is by scaring them. They may tell you that if you don’t pay right away they’ll have you arrested, deported, or sued. Don’t panic, and don’t let those threats get to you. If the IRS was going to take some action against you, it would do so legally and with due process, and typically only after a lot of warnings and official communication.  

Sadly, there are many scammers in the world who try to dupe unsuspecting people out of their hard-earned money. Don’t be one of these victims. Never provide personal information over the phone, and ensure all your contact with the IRS happens via official channels. 

Protect Yourself from Phishing

Have you heard of phishing scams? You probably have since, at this point, they’ve been around for quite some time. Just in case, though, these are scams through which scammers attempt to get sensitive personal information from you, and, if successful, use that information to do you harm. And, while countless warnings have been issued about these scams, they are, sadly, still alive and well, which is why it’s so very important to fully understand what they are, how they work, and how to protect yourself.   

Most phishing happens via email. Typically, the person (potential victim) is sent an email that sounds quite legitimate but directs the potential victim to a falsified website where he or she will be asked to provide personal information, such as a credit card number, a social security number, or a private password. These emails may seem to come from one’s bank, the IRS, one’s credit card company, or a social media account, but, in reality, they come from harmful sources that will use this information to their own benefit and to the victim’s detriment.

Some commonly run phishing scams include:

·         -Emails promising money or a refund of some sort…if you fill out a form to redeem it

·         -Emails warning you that your credit card funds have been used by an outside source and you can reclaim them by visiting a website and “verifying” your information

·        -Emails promising lottery winnings or inheritances if you just provide your personal information

-If you encounter a phishing scam or even THINK that you might have, remember these “golden rules” that will keep you safe from phishing:

·         -Never click links or open attachments unless you know FOR SURE who the sender is

·         -Immediately report any phishing emails to the appropriate source

·         -Be wary of emails that do not include your actual name

·         -Be wary of “professional” emails full of grammar and spelling errors

·         -Falsified web addresses/ web addresses that LOOK legitimate except for some small difference

By knowing what to look for and being on your guard, you can keep phishing from happening to you! Spread the word to others, too, so that your friends and family will be protected.

Cutting the IRS Budget, Its More Dangerous Than You Think

No one likes paying taxes, even if the money does go to (some) good use. That, in turn, means that nobody likes the IRS, the agency that enforces those taxes. Hating the IRS, though, and lobbying to have its funding decreased isn’t targeting the right agency. The IRS isn’t really as responsible for those awful taxes you have to pay and those archaic tax laws you have to follow as Congress is.

See, Congress is responsible for creating and changing the tax codes, laws, and amounts. Its aim is to promote positive things, such as marriage and home ownership, by giving tax breaks to people who do them and to make things more difficult for people who don’t do the things they should, like saving up for retirement.

So, if you really want to blame an agency for the tax laws you don’t like, blame Congress...except

that doesn’t really work because Congress, in a twisted sort of way, would just blame it on the IRS. Yes, that’s right. Congress, which is responsible for most tax laws, often blames the IRS for things it doesn’t like and then cuts its budget as “punishment.” Does that sound fair or sensical to you?

Despite the fact that it’s not really right or fair for Congress to blame the IRS for its own shortcomings, its budget cuts hurt everyone. For starters, they reduce revenue for the Federal government by cutting the very funds the IRS uses to go after people who skip out on their taxes or commit tax fraud.

And the worst thing of all is that all of this pressure and loss of funding is only going to make the IRS more aggressive and more annoying. Since it won’t be able to go after as many fraudsters, it will have to come down super hard on those it does catch. This is all a big mess with the IRS getting the short end of the stick. Hopefully, before too much damage is done, Congress will realize that cutting IRS funding was a very, very bad idea.

Related articles

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Identity Theft and Your Taxes

Your identity and money can be stolen in a tax-related scam via email (“phishing”), fax, phone, or letters. Some recent examples of identity theft scams are:

•    Refund scam. A bogus email, claiming to come from the IRS, tells you that you are eligible to receive a tax refund for a given amount if you just follow the instructions in the email.

•    Inherited funds, lottery winnings, and cash consignment scams. A bogus email, claiming to come from the U.S. Department of the Treasury, notifies you that you will receive millions of dollars if you follow the instructions in the email. This may be a multi-step scheme that includes instructions for you to deposit taxes on the funds before they can be paid out or the issuance of a phony check on which you must pay 10% tax before the check can be deposited.

•    EFTPS scam. A bogus email, claiming to come from the IRS, contains a realistic-looking screenshot of the IRS website with a message about fraud attempts regarding your bank account. The email states that the bank account can be unblocked if you just click a link and provide information.

•    EIN scam. A bogus fax, claiming to be from the IRS, informs you that you have failed to submit required bank account details. You are asked to fax back a form that requests your EIN, bank information, and officer signatures.

Notify the IRS

If you receive a tax-related phishing email, do not click on the links or open any attachments. Forward the email to phishing@irs.gov or call the IRS at 800-829-1040.

How the IRS Contacts Taxpayers

•    The IRS will never initiate contact with you by email or any social media tools to request personal or financial information.

•    It is unusual for the IRS to initiate contact by fax or phone call. You can call the IRS at 800-829-1040 to verify that an unexpected fax or phone call is legitimate.

Fraudulent Tax Returns

An identity thief might use your Social Security number to fraudulently file a tax return and claim a refund. You could be completely unaware that your identity has been stolen until your return is rejected for e-filing or you get an IRS notice or letter.

Rejected e-File

Your electronically filed return is rejected because the Social Security number belonging to you, your spouse, or a dependent has already been used on a tax return.

•    This situation can occur because of a mistyped num-ber or dispute about claiming a dependency exemption. Such cases do not necessarily indicate identity theft.

•    If your return has been rejected because of a previ-ously used Social Security number, it cannot be e-filed. You must file a paper return.

IRS Notice

You receive an IRS notice or letter stating that:

•    More than one return was filed in your name for the year,

•    You have a balance due, refund offset, or initiation of collection action for a year when you did not file a return, or  

•    IRS records indicate that you received wages from an employer you didn’t work for.

You should respond immediately to the name and phone number printed on the IRS notice or letter. You will be asked to complete Form 14039, Identity Theft Affidavit, and provide identifying information.

IRS Identity Protection Specialized

Unit (IPSU)

If you believe there is a risk of identity theft due to lost or stolen personal information, contact the IPSU immediately so the agency can take action to secure your tax account. • Call 800-908-4490.

• You will be asked to complete Form 14039, Identity Theft Affidavit.

Form 14039, Identity Theft Affidavit     

Form 14039 has two purposes.

1) Informs the IRS you are an actual or potential victim of identity theft that has or could affect your tax account.

2) Requests that the IRS mark your account to identify any questionable activity.

You must provide details of the actual or potential identity theft situation, tax years impacted (if known), address and other contact information, and a photocopy of valid government-issued identification.

Identity Protection PIN (IP PIN) Program

If the IPSU determines that you do have a tax-related identity theft problem, the IPSU will research your account, identify the IRS business unit handling the case, and monitor the case to ensure it is being handled in a timely manner.

•    The IRS may issue you an Identity Protection PIN (IP PIN). The computer-generated IP PIN has six digits and is specific to the tax year for which it was provided.

•    The IRS issues IP PINs to allow a legitimate taxpay-er’s return to bypass the identity theft filter, prevent fraudulent returns from being processed, and minimize taxpayer burden associated with potential delays when a return fails one or more of the identity theft filters.

•    A new IP PIN will be issued to you every filing season as long as the identity theft indicator remains on your account.

Using an IP PIN

You will receive an IRS notice in the mail containing the single-use six-digit PIN. The IRS does use email or fax to notify taxpayers of an IP PIN.

•    All six digits must be input on your Form 1040 in the space to the right of the spouse’s occupation line. Use of the IP PIN on the return acts as an authenticator to validate you as the legitimate owner of the Social Security number on the tax return.

•    If you lose or misplace the IP PIN letter, the IRS may issue a replacement IP PIN for the year. You may file a paper return without the IP PIN, but processing and refunds may be significantly delayed.

Surprise IP PIN Letter

The IRS has been known to mail an IP PIN letter to a taxpayer who was previously unaware of a potential tax-related identity theft problem. If you receive an unexpected IP PIN letter, you can call the IPSU phone number (800-908-4490) to verify that the IP PIN letter is legitimate.

Identity Theft Outside the Tax System

You may be at increased risk for tax-related identity theft for various reasons.

•    You have lost or had stolen a wallet, purse, or docu-ments that include sensitive identifying information.

•    You have noted questionable credit card activity or credit report information.

•    You have fallen victim to an identity theft scam.

Related articles

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• IRS warning financial institutions of recent scams (westmorelandtimes.com)

Death of a Taxpayer

When a taxpayer dies, there are certain returns that still need to be filed, a responsibility that falls onto the personal representative.

Personal Representative      

Under state law, a personal representative is the person appointed by a court to administer an estate. The term includes both executors (appointed when decedent has a will) and administrators (appointed in the absence of a will). A personal representative nominated in a will has no authority over estate assets unless appointed by a court.

Duties of Personal Representative

Duties include collecting all of the decedent’s property, paying any creditors, and distributing assets to beneficiaries. In addition, the representative is responsible for filing various tax returns and seeing that the taxes owed are properly paid.

No Court-Appointed Representative

When there is no probate and no appointed representative, the IRS will allow a “person charged with property of the decedent” to file the decedent’s income tax returns and claim refunds. IRS written guidance does not specify who this person should be. If there is a surviving spouse, he or she usually files a joint final Form 1040 and any other required returns. If there is no surviving spouse, the person who files is commonly: • The trustee of the decedent’s revocable trust,

The personal representative nominated in the will who would have been appointed if probate was required, or

A beneficiary receiving nonprobate assets who under-takes the work.

The IRS uses the term “personal representative” to refer to anyone filing for a decedent, whether or not court appointed.

Visit us on Thursday, October 2 for Part 2 of this series.

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Don’t be Victimized by contacts from fake IRS agents

A recent uptick in scam IRS e - mail and phone calls has prompted urgent government warnings

to taxpayers. But people are finding that recognizing a bogus IRS contact is tougher than they think. The tactics used by criminals to steal your identity vary widely and are surprisingly sophisticated. A common recent scam is an official-looking e - mail purporting to be from the IRS requesting an immediate update to your e-file account. Anyone who clicks on the link will be taken through a series of requests for personal information that might be used to commit fraud in your name. And if you happen to divulge bank account information, they may try to steal directly from you as well. 

So what is the best way to protect yourself against such a scheme? First, recognize what is NOT proof of a genuine IRS contact. An IRS logo on an e - mail or letter, while adding the look of authenticity, could have been lifted from the IRS website. An e - mail from an address containing the letters “IRS” is also not a reliable sign. Scammers can create e - mail addresses that look deceptively similar to IRS.gov (the official IRS site). Surprisingly, even a scammer’s possession of the last four digits of your social security number is not proof. This, too, can be obtained by a thief. 

Scammers will also try to appear genuine by following up an e - mail with a phone call, or vice versa. They often create a sense of urgency and threaten all sorts of legal and punitive actions if you don’t respond immediately. Here is what you should do in response to any IRS contact. If the first contact is by letter, forward a copy to your tax preparer to determine if it is legitimate. If the initial contact is by phone, do not provide any personal data over the phone. The call is most likely not from the IRS. And if the first contact is by e - mail, do not respond to it at all, and do not click on any attached links. The IRS does not initiate contact by e - mail – ever. Instead, send it on to the IRS at phishing@irs.gov to help prevent tax scams from spreading.

Related articles

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The IRS and Phone Calls

Over the past few days,
we have received quite a few calls
from our clients indicating they have
received a phone call from someone
stating they are from the IRS
and that they have a tax issue.
Please review this noticethat the IRS issued regarding phone scams
and what to do if you receive one of these phone calls.
If after reviewing you still have questions,
do not hesitate to contact
our office at (630) 548-9600
to investigate further on your behalf.

Related articles

• This call may freeze you in your tracks, but don't fall for it (fox8.com)
• 5 Tips to Protect Your Identity at Tax Time (allstate.com)

How to Avoid a Tax Audit

No one wants to go through a tax audit, and fortunately, there are some simple things you can do to reduce your chances of having to go through this dreaded process.   

For starters, make sure you don’t make any errors when you file your tax return. Yes, that’s easier said than done, but it’s so important to file correctly. Errors are an easy way to get the IRS super-interested in your taxes and in what other “mistakes” you might have made. Get all of your forms together before you file and check and double check to make sure you’ve listed dependents and exemptions properly.

Also, you’ll definitely want to remember to include all of the income you received from all of your jobs. Remember, the IRS has copies of every single 1099 and W-2 with your name on it, so you don’t want to leave anyone or any income out.

Finally, if you truly want to reduce your chances of an audit, hire a trustworthy accountant to take care of all your tax matters for you. There are plenty of good accountants and the right one can make it easy to avoid an audit.

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Timely Tax Returns

Naperville Income tax professionals can assist you in obtaining the very best outcome in payment and reduction of penalties.  Every year thousands of tax payers are subjected to penalties.  There are specific reasons for this and are as follows:

v  Through the year on every check an amount was deducted for income taxes.  Not enough was claimed and is considered an underpayment.

    - Expenses were not correctly calculated and claimed on the tax return.

    - Income that was not claimed on the tax return.

 -The tax return was not filed by 4/15 or an extension was not filed by 4/15.

 -Tax liability outstanding balances were not paid on time.

A large majority of us find that we have tax penalties at one time in our lives.  No matter what the case may be, if you receive a letter from the IRS (Internal Revenue Service) that has a bill in it for the additional amount you owe for a designated tax year, it is wise to contact a tax professional to assist you.

If your tax return was not filed on time or the liabilities you owe are not paid by the due date on your return, additional fees will be charged by the IRS.  An amazing amount of 5% per month will be charged up to 25% of the total tax on the return.  A fee is assessed even if no tax is due.  If it is not filed on time, a $100 fine is due.  Contact a Naperville Income tax professional to help with your tax needs.