We're less than 2 weeks away from Tax Day. Normally, your taxes need to be filed by April 15, but due to a couple of date conflicts, this year we have until April 18.
To stay ahead of cybercriminals, who are always out in full force during tax season, we try to keep you informed of the latest scams. Unfortunately, a new rule with the Internal Revenue Service (IRS) is going to muddy the waters when trying to spot a scammer.
What IRS change could cause confusion with taxpayers?
What we're talking about is the way the IRS collects a tax debt. Time and time again we've told you that if anyone calls you claiming to be collecting a tax debt, hang up. That's because the IRS had a rule that they would never ask for payment information over the phone.
That's about to change.
The IRS is going to start using third-party debt collectors. It plans to begin private collection of certain overdue federal tax debts in April 2017 and has selected four contractors to implement the new program. The IRS posted this explanation on its site:
"The new program, authorized under a federal law enacted by Congress last December, enables these designated contractors to collect, on the government's behalf, outstanding inactive tax receivables. Authorized under a federal law enacted by Congress in December 2015, Section 32102 of the Fixing America's Surface Transportation Act (FAST Act) requires the IRS to use private collection agencies for the collection of outstanding inactive tax receivables."
These private collection agencies will be working on older accounts where the taxpayer owes money but the IRS has stopped working on the account.
How to identify an IRS phone scam
Knowing that this rule change could open the floodgates on phone scams, the IRS is telling taxpayers what to watch out for.
- Expect written correspondence - If you are impacted by this change, the IRS will give taxpayers and their representatives written notice that the accounts are being transferred to private collection agencies. The agencies will send a second, separate letter to the taxpayer and their representative confirming this transfer.
- Electronic Payment - Private collection agencies will NOT ask for payment on a prepaid debit, iTunes or gift card. Taxpayers will be informed about electronic payment options on IRS.gov.
- Checks - Payment by check should be payable to the U.S. Treasury and sent directly to the IRS, not the private collection agency.
So if you receive a call from someone claiming to collect an IRS debt, it could actually be real now. If you are concerned that the call is a scam, ask the alleged representative for their toll-free number. Here are the four private collection agencies that the IRS will assign cases to:
- CBE - P.O. Box 2217 Waterloo, IA 50704 1-800-910-5837
- ConServe - P.O. Box 307 Fairport, NY 14450-0307 1-844-853-4875
- Performant - P.O. Box 9045 Pleasanton, CA 94566-9045 1-844-807-9367
- Pioneer - P.O. Box 500 Horseheads, NY 14845 1-800-448-3531
If you're skeptical about the agent on the phone, get their company information, phone number and extension. Then call the company's official toll-free number listed above.
The IRS also urges you to stay vigilant against tax scams from anyone claiming to be collecting on the agency's behalf. Even with private debt collection, you shouldn't receive unexpected phone calls from the IRS demanding payment. When people owe tax, the IRS always sends several collection notices through the mail before making phone calls.
Click here if you want to see the IRS page describing these changes in detail.