By Sandra Guile
Better Business Bureau
If you owe the IRS money, chances are you’ve already received something from them reminding you that still have an outstanding debt.
Starting April 2017, you may also receive a phone call from a private collection agency (PCA) approved by the IRS to follow up and collect on back taxes. This new practice goes against many news reports stating that the IRS doesn’t make phone calls.
However, tax scammers are still out there, so it may be a little difficult to determine if you’re speaking with a legitimate IRS employee, a private contractor, or a scam artist.
Who is allowed to call?
According to the IRS, four collection agencies have been assigned to a few hundred outstanding cases to start out with this month. The debtor will receive a letter first from the IRS indicating that their account has been transferred to a PCA. Then, they’ll receive a letter from the collector explaining who they are and that they’re required to follow the Fair Debt Collection Practices Act.
What do the contractors do?
These callers are contracted to collect on unpaid individual tax obligations not currently being pursued by IRS collections department. They are typically debts that were assessed by the agency several years ago, and the people being called have already been contacted multiple times before. The program was authorized under a federal law enacted by Congress in December 2015 and enables designated contractors to collect unpaid tax debts on the government’s behalf.
They are authorized to discuss payment options and help taxpayers set up payment agreements to settle their debt. Always make sure that any payment they set up goes directly to the IRS or the U.S. Treasury. No payments should go to a private firm or company. For more information about payment options, visit IRS.gov/payments.
Is this real?
In the wake of an established tax scam, this new process raises a lot of questions about what’s real and what’s not. How do you tell the difference between a legitimate call and a scammer?
The private firms contracted by the IRS are not authorized to take enforcement actions against taxpayers, meaning they can’t use government action as a way to pressure you into paying up. They’re only allowed to call about a tax debt you’ve been aware of and been contacted about previously. The agencies selected include: CBE Group of Cedar Falls, Iowa; Conserve of Fairport, N.Y.; Performant of Livermore, Calif.; and Pioneer of Horseheads, N.Y.
If you’re uncertain about whether or not you have unpaid tax debt from a previous year – which is what the private collection firms will handle – go to www.irs.gov/balancedue to check. If the account balance says zero, that means nothing is due. If you know you have a zero balance and you still receive a call, chances are it’s probably a scam.
What if it’s not real?
Even if you know that there are two types of IRS calls going around – one real and one fake – it may be difficult to tell in a stressful situation. Here are a few ways to spot the difference between a scammer and the real deal:
• Scammers will usually call and demand payment via prepaid means – like a gift card or wire transfer. The IRS mails the taxpayer a bill first, and if the case is then assigned to the PCA, both the IRS and the third-party contractor will let the taxpayer know in a letter.
• Real tax payments are always sent directly to either the Internal Revenue Service or the U.S. Treasury, never a private company.
• The IRS doesn’t threaten to send police to people’s houses to have the debtor arrested if they don’t pay immediately – this is a high-pressure tactic designed to make people panic.
• Taxpayers are always given the opportunity to question or appeal the amount being owed; scammers demand that everything be settled immediately.
• The IRS and the third-party contractors won’t ask for debit or credit card numbers over the phone – they’ll just help you set up payment options. Anyone suggesting otherwise should be treated with caution.
If you encounter a tax scam or any suspicious activity from a caller claiming to be with a government agency, make sure to report it to the IRS and BBB’s Scam Tracker. It’s an indication that a scammer could be trying to take advantage of the situation.
Sandra Guile is the Community Outreach Specialist for BBB. She promotes BBB’s message of marketplace ethics through public speaking engagements, presentations, media relations, press releases, web content, and other written materials. Contact her at (513) 639-9126 or sguile@cincinnati.bbb.org. Your BBB is located at 1 East 4th Street Suite 600 Cincinnati, Ohio 45202 – to reach the office, call (513) 421-3015.
