Robo-Calls Rise as IRS Response to Identity Theft Criticized

A garbled voice on your phone says “…This will be an intentional second attempt to avoid an initial appearance before a magistrate judge or grand jury for a federal criminal offense. This is the final attempt to reach you. To resolve this issue immediately and speak to a federal agent, call 562-286-5774.”* Your heart races and you pause for a moment, trying to comprehend just what this call is about. Then you know. It is a scam, and a particularly egregious one because of the nature of the threat—federal criminal action. Your next thought is, “I hope my elderly mother doesn’t get this same call.”

IRS impersonation calls are on the rise, according to a recent IRS news release, and scammers are using different tactics to get money out of the victims. The IRS has seen an increase in “robo-calls” where scammers leave urgent callback requests like the one above telling taxpayers to call back to settle their “tax bill” or legal action will be taken against them. If a victim calls back, the scammer may threaten to arrest, deport or revoke the driver’s license of the victim if they do not agree to pay.

If nothing else, the payment methods demanded should be a red flag to anyone who receives this type of call. The IRS impersonators sometimes demand payments on iTunes and other gift cards. The IRS has warned taxpayers that any request to settle a tax bill by putting money on any form of gift card is a clear indication of a fraud.

It is important to understand that the IRS has set procedures for dealing with taxpayers and will never do the following things:

    • Call to demand immediate payment over the phone. The IRS also will not call you about taxes owed without first mailing you a bill.

    • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.

    • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.

    • Require you to use a specific payment method for your taxes, such as a prepaid debit card, gift card or wire transfer.

    • Ask for credit or debit card numbers over the phone.

What to Do

If you get a suspicious phone call, here’s what the IRS recommends:

    • Do not give out any information. Hang up immediately.

    • Contact TIGTA (Treasury Inspector General) to report the call. Use their “IRS Impersonation Scam Reporting” web page or call 800-366-4484.

    • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

    • Call the IRS directly at 800-829-1040 if you think you may owe taxes.

You also should notify your tax adviser and discuss ways to address with any tax identity theft that may have occurred.

Employment-Related Identity Theft

Although the IRS has extensive information on its website about identity theft, it is being criticized for not doing enough to notify taxpayers and the Social Security Administration (SSA) about employment-related problems. IRS processes are “not sufficient” to aid victims of employment-related identity theft, concludes a recent report from the Treasury Inspector General for Tax Administration (TIGTA).

Employment-related identity theft occurs when someone uses the identity of another person to gain employment. The thief collects the money from the employer but does not pay taxes. Instead, the taxes are reported under an innocent victim’s taxpayer identification number, which can cause
numerous problems. Here are some of the signs of employer-related identity theft:

    • You received a notice from the Internal Revenue Service stating that you received wages that you did not earn;

    • You receive a Form W-2 or 1099 from an employer for whom you did not work;

    • Your Social Security benefits have been adjusted/denied because of wages that you did not earn;

    • Your annual “Notice of Earnings” statement from the Social Security Administration shows more income than you have earned.

If someone is using your social security number for employment, when you file a return, you may receive a notice from the IRS that there is a discrepancy between the amount you report on your return and the amounts reported under your name and social security number on W-2s or Forms 1099. The IRS’s “Automated Underreporter” program identifies these discrepancies by matching returns to reporting forms.

During the period February 2011 to December 2015, the IRS identified almost 1.1 million taxpayers who were victims of employment-related identity theft. The problem, TIGTA concluded, is that the IRS did not promptly notify either the taxpayers or the Social Security Administration about the problem. TIGTA looked at a sample of IRS notifications and found that the IRS failed to notify the Social Security Administration of misreported earnings in 21 percent of the cases.

Recommendations, IRS Looking to 2017

TIGTA recommended that the IRS 1) develop procedures to notify all individuals identified as victims of employment -related identity theft; 2) develop a tracking process to ensure that notices are completed and sent to the SSA; and 3) send notices to the SSA for past discrepancy cases. In response, the IRS has scheduled programming changes for January 2017 to notify taxpayers when the IRS has reason to believe they may be victims of employment-related identity theft.

* This is an actual call the author received in August 2016.