Today I want to talk a bit about IRS phone scams. The last couple years, there has been a huge increase in the number of IRS impersonators calling people in the United States claiming that the person called owes tax and they must take immediate action or they will be arrested. Many people have been bilked of millions of dollars due to their unfounded fear of the IRS.
In any event, here's how the scam works. You get a call from someone using an English sounding name claiming to work for the Internal Revenue Service. You are informed you owe significant money, or perhaps you have serious legal allegations against you. If you don't comply with their instructions, local police will be to your door shortly to take you into custody. Sound ridiculously outlandish? Of COURSE it is. Whats even more outlandish is that in the year 2017 IT STILL WORKS. Honestly? IMHO if you fall for such a scam by paying into iTunes gift cards? You deserve to lose your money.
I have been on the receiving end of one of these calls myself, and lets just say my response to the caller was...amusing. Perhaps its my Boston accent, perhaps an incessant need to mess with lowlife scum, but I actually called them back and messed with them. Twice. Played the audio from an adult video while my phone was on speaker. Works great. I recommend you do this. Not. Trust me. Just hang up the phone. Don't talk to them as anything of value you say might be recorded as information to be used on a scam phone call in the future. Just hang up the phone.
So how can you tell the person on the phone is fake? Well first off, if you've been working with me you already know if you owe money or not. It is VERY rare that someone who has been filing tax returns owes money and doesn't know it.
Secondly, while there is a federal crime for willful failure to pay tax, the government's burden in proving the willful aspect in a criminal sense is very high. Unless you have liquid assets and hide them and simply refuse to pay your tax obligation, there won't be a criminal case.
Thirdly, the IRS doesn't and cannot institute a criminal prosecution on its own. It can investigate someone, but it won't arrest someone without approval from the Department of Justice and the local US Attorney. The likelihood of a US Attorney signing off on a arrest for this is about the same as Hillary Clinton getting inaugurated in two weeks.
Not satisfied? Scammers use incorrect terminology. Local police do not get involved in arresting people for this. Sheriffs are not coming to get you. Why? Because only IRS Special Agents can arrest someone for this. They will claim to be calling from IRS Headquarters in Washington, D.C. Trust me, if it were legitimate, they would be outside your door, and coming from a local office.
Something else, IRS Revenue Officers do not initiate taxpayer debt collection contact over the phone. They CAN but they do not. You will receive several statutory mailings informing you of and formally demanding payment but they will not call you. You MAY receive a knock on your door, or at your place of business during normal business hours, however phone calls before 8am or after 9pm are prohibited, as is appearing at your place of business if it is known that your employer doesn't allow it. If they do call, it is only once contact has been established with a Revenue Officer. They cannot call to harass you, they cannot threaten you with harm. The IRS can actually be sued for damages for violating the tax code's version of the Fair Debt Collection Practices.
One last item you should be very aware of. An IRS employee MAY NOT contact a taxpayer directly if that person has a listed legal representative on file, such as an Enrolled Agent, CPA, or attorney. The only exception to this rule is if the employee is not getting timely or any response from the taxpayer's representative. Does it still happen? Yes. Is it often? More often than it should but not so often as to be epidemic, and at least in theory you could sue for damages under the same provision listed above. In any event, a scammer is not going to know you have a representative if in fact you have one.
If you do get one of these phone calls I strongly suggest you report it here.