I got a panicky call last week from a client who owes the IRS a considerable sum of money. The IRS had agreed to an installment agreement about a year ago, and he’s been faithfully making his monthly payments, but then he got a call that scared his socks off.
In a thick accent, a “Mr. Smith” claiming to be from the IRS informed my client that the installment agreement was now void and that he must pay the agency the full balance by the next close of business day or he would be arrested for failure to pay taxes.
Talk about an adrenaline rush followed by lots of sputtering, “But, but, but… I have an agreement in place!”
The IRS agent informed my client that the rules had changed and the installment agreement no longer holds. My client asked to speak to his manager and the person who took the phone confirmed what the agent had told him. However, when he asked for the manager’s badge number, the phone line disconnected.
It was a hoax. One that if the client had fallen for, would have continued on to the sharing of banking information that would allow the scammers to tap his account and abscond with his funds.
Every taxpayer should be wary of any calls from “the IRS.” The agency generally contacts taxpayers via snail mail and doesn’t normally make phone calls.
It will also not make a threatening phone call of this nature out of the blue. Before the IRS takes serious action on a taxpayer’s account, it precedes the action with a series of letters generally over a six-month period along the lines of: Letter No.1--this is your balance owing, Letter No. 2--ahem, this is your balance owing, Letter No.3--you need to contact us to make arrangements about your balance owing, Letter No.4--If you don’t contact us soon about the balance owing, we’re going to rip off your bank accounts and anything else we can get our mitts on and Letter No.5--, Hammer is dropping just to let you know. Last chance to call and salvage this mess.
And if you ignore that last letter, expect your bank account to become overdrawn without the phone call from “Mr. Smith” to “warn” you.
If you do receive a phone call, and suspect for various reasons that the call is legitimate (perhaps you’ve received all of the aforementioned letters and your account has been assigned to a revenue agent and you’ve ignored its pleas to listen to reason) you should ask for the badge number of the employee. It is possible for the person calling to make up a badge number, so you should also ask for his or her phone number and tell them you will have your tax professional return the call and to please put a 10-day hold on the account while you contact a tax professional. This should result in a hang up if it was a scammer.
If the call is legitimate, the IRS agent will likely grant the hold to allow you to contact a professional. Then do it! Seek professional help or refer to the last letter you received from the collections division and call the phone number listed in the upper right hand corner. Anyone in this department can pull up your account and let you know where things stand.
Also note that the IRS will never contact you via email. For a while I was getting several emails a day saying there was a problem with my company’s payroll tax deposit and would I please click on the link and reenter my banking information. Oh yeah, right, I’m so on it.
As a final advisory, if you are having tax problems, take the bull by the horn. It’s not as bad as you think. Hiding solves nothing and only adds to a final misery. If you fear speaking to the IRS, hire a tax professional to negotiate on your behalf.
Bonnie Lee is an Enrolled Agent admitted to practice and representing taxpayers in all fifty states at all levels within the Internal Revenue Service. She is the owner of Taxpertise in Sonoma, CA and the author of Entrepreneur Press book, “Taxpertise, The Complete Book of Dirty Little Secrets and Hidden Deductions for Small Business that the IRS Doesn't Want You to Know.” Follow Bonnie Lee on Twitter at BLTaxpertise and at Facebook.