How to Detect Tax Scams and Phishing Attempts

I received a call from a retired attorney who was seeking advice about a threatening letter he received from the IRS.  He said he had been working with a “tax person” on past IRS issues; sadly, she died in an accident a few months prior and he didn’t know who to talk to.  The “Intent to Levy” letter showed an October 10 deadline for response or payment of $12,113. The man called me October 7.

There were many clues that indicated the letter was not actually from the IRS but was, rather, a scam.  Out to steal his money, the scammers hoped the man would call the phone number in the letter, provide them with his credit card information, and then authorize a more-than-$12,000 transfer to someone unconnected to the IRS or Social Security.

Because he had been dealing with the IRS on past tax issues, it didn’t cross his mind it wasn’t a real demand letter. He said the wording in the letter made him panic and that is why he called me.

I was able to prevent this gentleman from being scammed out of a substantial sum of money. Scammers make millions of dollars every year from people who panic when they receive letters, emails, or even phone calls. The scammers are forceful and demand money immediately to settle tax debts or a range of other issues to prevent penalties, or more severe consequences.

Below are some of the warning signs to look for when you receive demand letters.

  • The letter is addressed to just one taxpayer (the IRS are now required to send demand letters to both husband and wife if they file a joint tax return).
  • The return address envelope does not contain a full mailing address from the addressee.
  • The response time is unreasonably short. There is a sense of urgency to comply.
  • The only option for payment is to call a phone number listed on the letter.
  • There is no return envelope for a response.
  • There is no tax period shown; the IRS always shows what tax year the communication relates to.
  • The letter has wording that has half the word in red, and half in black. Obviously a very bad printing job!

Phishing has been around for a long time, and innocent people are scammed every day. If you receive a letter, email, or phone call demanding immediate payment, take the time to talk to an Enrolled Agent, CPA, your financial advisor, or any other trusted professional before you provide your credit card or any other personal information. Nothing is that important that it must be paid immediately.

Remember the IRS will never send communication to you by email and they will never call you on the phone requesting your personal or credit card information.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.