Communications and Collections: A Look at Predatory Tax Fraud
Every year, the IRS and the Federal Government lose thousands in tax revenue due to the “tax gap,”1 the difference between taxes owed and the money collected. Annually this amounts to around $450 million dollars. Voluntary tax compliance, in other words the people who pay their taxes without the IRS forcing them to pay up, is only 81.7%. When collections by the compliance and enforcement division and late payments are factored in, the percentage goes up to 83.7% and reduces the gap by close to $50 million. Unfortunately, fraudulent collectors have taken advantage of the situation by posing as IRS collections agents2 and intimidating or confusing taxpayers into handing over their money. The Treasury Inspector General for Tax Administration (TIGTA) says roughly 896,000 taxpayers are fraudulently contacted each tax season and just over 5,000 of them have paid over $26.5 million annually to fake agents. A high level of voluntary tax compliance remains critical to help ensure taxpayer faith and fairness in the tax system. Those who don’t pay what they owe ultimately shift the tax burden to those who properly meet their tax obligations. The IRS has the authority to actively collect taxes from those who refuse to pay. However, they follow certain procedures outlined clearly on their website. They will never:
- Call to demand immediate payment, nor will the agency call without first having sent a bill.
- Demand you pay taxes without giving you the opportunity to question or appeal the amount.
- Require the use of a specific payment method, like a prepaid debit card.
- Ask for credit card or checking account information over the phone.
- Threaten to bring in local police or other law-enforcement to make an arrest.
- Do not give out any information. Hang up immediately.
- Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484.
- Report the call to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.