Recently, one of our U.S. based clients received a call from someone claiming to be from the U.S. Internal Revenue Service (IRS) Tax Fraud Department. Our client disconnected the call, thinking that it could be a tax scam and immediately consulted us.

Thanks to her quick thinking, she avoided falling victim to a tax scam. Here is an overview of this current tax scam, and preventative steps to help dodge it.

 

IRS Tax Fraud Department Tax Scam

 

In the ‘Tax Fraud Department’ tax scam, the person poses to be from “Tax Fraud Department” of the IRS, and demands money for back taxes, or be arrested by the authorities.

In other reported incidents, victims have informed about calls from the ‘IRS Federal Crimes Investigator’ claiming that the victim owed money from back taxes, and that if she did not pay, police would respond and take the victim to jail.

U.S. taxpayers should be aware that the IRS does not make personal calls in case of money owed. Instead, they will issue a notice in the form of a letter to address any pending tax issues including outstanding tax amount.

All IRS notices are sent to the address provided by the taxpayer on their latest tax return filed. If you have never filed a U.S. tax return and receive a call, it should be treated as a scam solicitation.

The IRS will never ask for an immediate payment. In various cases, reports have shown fraudulent phone calls requesting immediate payment through online payments, gift cards, or a wire transfer. It is very important to keep in mind, if you owe money to the IRS, it is the taxpayer’s tax right to request for instalment payment options or tax debt forgiveness, if they qualify.

Furthermore, the IRS cannot threaten to bring in the police or other law-enforcement groups if there are any tax dues. An arrest is only made in drastic tax situations. These situations can include: tax crimes, tax evasion, and/or situations wherein there is no response from the taxpayer even after making multiple communications.

Having said that, always remember that these tax scammers are professionals. They are well versed with a script to imitate the tax agency and other service departments, such as utilities. Additionally, at times, the number on the phone’s display could appear to be from the IRS, utilities department or the local police authority. However, fear not, it is better to disconnect the call, ignore the e-mail, or text message, and avoid clicking on any website links provided in any of these forms of communication, and reach out to the IRS or your tax return preparer regarding the particular tax refund, or tax due situation.

Many tax authorities, such as the IRS or Canada Revenue Agency (CRA) have provided access to their website and created online tax accounts for the respective country’s taxpayers such as: Canada’s MyCRA Account, and IRS’ . Every detail regarding the past filed returns, tax dues, tax refunds, advance tax payments, notices, and letters issued are all present on the taxpayers account page.

Learn more about keeping your online tax account safe

 

How To Avoid Falling for These IRS Tax Scams

As mentioned in our previous tax-scam related articles, here are few tips to prevent falling for these tax scam traps:

  • Never give personal or financial information to an unsolicited caller or email.
  • Be suspicious of callers who demand immediate payment for any reason.
  • Utility companies and government agencies will never contact for payment using third parties, such as: Moneypak or other prepaid services.
  • Remember that anyone who has the number on a prepaid card has access to the funds on your card.
  • Never wire money, provide debit or credit card numbers to a stranger.

A call from someone stating to be from the IRS Tax Fraud Department is just one of the many ways by which tax scammers try to shell out money from taxpayers. There are many other methods of scamming used by these tax scammers. Learn more about these U.S. Tax Scams to stay a step ahead of these fraudsters.

Having said that, in the last few years, the IRS has been collaborating with local and state tax authorities, and financial institutions to discuss and come up with new, and improved methods to prevent tax scams and tax identity theft. These summits have been quite successful in preventing tax identity thefts. Some of IRS’ identity theft and tax scam measures for tax year 2017 involved issuing Electronic Filing Identification Numbers (EFIN), Form W-2 Verification codes and other similar method.

Being informed and staying vigilant is the key to avoiding falling prey to these tax scams. The alleged IRS agent calling you will not get offended if you disconnect the call or refuse to make immediate payment of your tax bill. You have every right to contact the IRS and your tax practitioner before proceeding with making payments.

Likewise, the IRS has your account number to make a direct deposit of any refund; otherwise, the agency will issue a check of the refund to the address provided on the tax return. Any other refund, which you were probably not expecting or are not aware of, could supposedly be a tax scam, especially if the text, mail or phone call asks you to click on a website link to process the refund to your bank account.

In such cases, by clicking the link and entering your financial details, you will only be providing your account details to the scammer, making you susceptible to future tax scams and identity theft as well.

 

AG TAX LLP CAN HELP

If you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of US and Canadian tax laws as well as cross-border compliance.

Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.

We can assist with:

  • Canadian Personal and corporate tax returns
  • Cross Border Taxation and Business Planning
  • US Personal and Corporate Taxation
  • Disclosure of Foreign Assets and other information filings
  • Retirement planning
  • Estate Planning, Inheritance tax advice

To obtain a quote or to arrange for a tax consultation to discuss your US Canada cross border tax queries, please contact us at:

  • 604-538-8735 (Greater Vancouver Area, BC)
  • 780-702-2732 (Greater Edmonton Area, AB)

 

Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.