The Unlikely IRS Phone Scam Victim

Have you heard about those IRS phone scams?  No, it’s not what you’re thinking; not scams sponsored by the IRS.  They are scams perpetrated by individuals posing as IRS personnel, and they have been more prevalent than ever in the past couple years.  If you haven’t heard of them then maybe the IRS isn’t being aggressive enough with its public announcements and warnings.  If you do know about these schemes then maybe you have pondered the questions “Who are these people that pay thousands of dollars to phony IRS agents?  Can’t they tell it’s a scam?  How can someone be so gullible?”

I have definitely had these kinds of thoughts, that is until reading the story of Halah Touryalai, staff writer for Forbes.  She was recently contacted by one of these scam artists and almost fell for it.  This is an expert on finance and investing; somebody who should probably know better.  And even though she stopped short of doling out the $5,000 that they were demanding of her, they definitely had her going.  This is somebody who has always paid her taxes and never had a reason to doubt herself.  It only goes to show that if these scam artists call with enough urgency and authority in their voices, they can successfully dupe just about anybody.

Touryalai was told a whole host of lies on the phone that day:

  • The IRS had launched an investigation against her
  • She had attempted to defraud the government by not reporting all her income
  • The IRS was going to get a warrant for her arrest
  • The IRS was going to seize her property
  • The IRS had already issued a bank levy to collect the tax debt
  • The IRS had suspended her driver’s license and passport
  • Her social security number had been “blacklisted”
  • Somebody was waiting at her office to arrest her when she arrived
  • She could avoid further action if she paid $4,900 within the next hour

Be careful out there!  As long as you know how the real IRS operates, you’ll be fine.  The IRS will never demand that you make payments over the phone.  They will rarely contact taxpayers by phone without first sending notices by mail (and certainly not for a measly $4,900!).

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When the IRS Goes Above and Beyond

Sometimes when I call the IRS with questions about a specific tax account, I want them to scour the entire file, read all the notes, research all the issues, and give me all the pertinent details.  Other times I contact the IRS with only one or two very specific questions; I want to get in and get out, and I don’t particularly want them lingering on my client’s account longer than necessary.  The truth is, sometimes (if not most of the time) it is a huge disadvantage trying to deal with the overzealous IRS representative.  They tend to make issues where there are none.  It is as if they don’t have enough work to do so they have to create work for themselves.  Maybe you know what I’m talking about.

Christine O’Donnell knows what I’m talking about.  Back on March 9, 2010 she announced that she was running for the United States Senate.  Later that same day one of these overzealous IRS types named David Smith pulled up O’Donnell’s tax record “just out of curiosity” and leaked her private tax records to reporters.  Or if he didn’t leak it personally, then he put it in the hands of somebody else who did.  And it pretty much ruined her chances of getting elected.  See, the information Smith decided to make public was a Federal Tax Lien (filed when a tax debt goes unpaid).  But it turned out that this information was inaccurate; O’Donnell didn’t owe the IRS.

This story is probably fairly mind-blowing to most people who do not regularly deal with the IRS.  I’m not that surprised by it though, especially the part about the erroneous lien.  The IRS makes mistakes like this all the time.  And as far as I know, David Smith still works at the IRS.

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2014 Tax Season: Status Check

Today the IRS released some key filing season statistics to show how they are doing compared to last year at this time.

So far the IRS has received some 49.6 million tax returns and has processed around 98 percent of them.  A vast majority of those returns were filed electronically — about 46.6 million.  If you hadn’t noticed, as much as the IRS loves sending taxpayers mounds of mail, they really do not like receiving it.  Hence the constant emphasis on e-filing.

So far the IRS has paid out over 40 million tax refunds; most of them being directly deposited.  As much as the IRS loves sending taxpayers mounds of mail, they really do not like sending paper checks.  Hence the constant emphasis on direct deposit.

One stat that always blows my mind is the average refund amount, which is now over $3,000.  I think that number tapers off as we approach the tax filing deadline since those who are eager to file early are typically the same people who expect a fat tax refund.  Personally I would rather pay what I owe in April than give the government an interest-free loan throughout the year.

And finally, the statistic that has left me wondering is the website traffic.  This is one of the only stats that has dropped since last year.  The only other stat that is lower this year is the number of e-filed returns by tax professionals, but this is probably going to continue to drop as the number of e-filed returns prepared by taxpayers from their home computers (self-prepared returns) continues to rise.  Could the decreased website traffic mean that people are relying more heavily on tax software?  Could it mean that taxpayers are turning to the phones more than in years past?  There are a million possible explanations.

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IRS Tougher on Tax Crimes

Today the Criminal Investigation (CI) division of the IRS announced the release of its annual report which covers fiscal year 2013.  Everything in this report suggests that the IRS is more aggressively pursuing tax criminals.  Here are just a few highlights:

  • Criminal investigations: 12.5% increase
  • Criminal prosecution recommendations: 18% increase
  • Criminal convictions: 25% increase

But the most shocking statistic is not even reflected in this short list.  Get this: the conviction rate for fiscal year 2013 was 93 percent!  In other words, I don’t think the IRS is going to recommend prosecution of a case that it isn’t almost certain to win.  Of course, the IRS’ interpretation of this statistic is that they just have top notch attorneys:

The conviction rate is especially important because it reflects the quality of our case work, our teamwork with law enforcement partners and the U.S. Attorneys’ Offices

~ Richard Weber, Chief of Criminal Investigation

The IRS is especially intolerant of identity theft (it boasts membership in over 35 identity theft task forces) and I am sure that this accounts for many of the recent convictions.  Some of the other tax crimes mentioned in this report include public corruption, money laundering, terrorist financing, and narcotics trafficking.

If you are wondering / stressing about whether or not you will go to jail for failure to file a tax return or failure to pay your taxes, I still think the answer still has to be “you could be.”  However, this phrase picked from the IRS’ official Newswire statement is very revealing:

CI investigates potential criminal violations of the Internal Revenue Code and related financial crimes in a manner to foster confidence in the tax system and compliance with the law.

I don’t think its a coincidence that the first concern of CI is to “foster confidence in the tax system” — secondary to fostering voluntary compliance.  How does the IRS foster confidence in the tax system?  It is not done by nailing “small fish,” which would probably have the opposite effect.  It is done by high profile convictions.  The IRS is more aggressive with high-dollar cases and cases involving public figures; the kinds of stories that make the evening news.

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2014 Dirty Dozen Revealed

Every year around the beginning of tax season, the IRS comes up with its “Dirty Dozen” tax scams list.  In recent years the top three have been (1) Identity Theft; (2) Phishing; and (3) Return Preparer Fraud.  The 2014 list includes Identity Theft and Phishing in the top three again, this time along with “Pervasive Telephone Scams.”  Phone scams often take advantage of recent immigrants, the elderly, or uneducated.  It is easy to avoid a phone scam if you know what to look for and if you maintain a certain degree of skepticism when receiving an unsolicited phone call.  However, as easy as it is in theory, these phone scams must be at least somewhat successful or they wouldn’t be described as “pervasive,” and they wouldn’t have made it to the top of the Dirty Dozen this year.

Here is the Commissioner’s official generic statement:

Taxpayers should be on the lookout for tax scams using the IRS name. These schemes jump every year at tax time. Scams can be sophisticated and take many different forms. We urge people to protect themselves and use caution when viewing e-mails, receiving telephone calls or getting advice on tax issues.

The reason that the IRS releases the Dirty Dozen list in February is that they have noticed a spike in tax scams around this time of year.  However, just as the IRS can (and will) collect on delinquent tax accounts by issuing a wage garnishment or bank levy throughout the year, tax thieves and scam artists pretty much work around the clock.

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Sacramento Pot Shop Refuses to Negotiate with IRS

It has been a while since I have seen news about the tax problems of medical marijuana dispensaries.  The one I saw today involves a Sacramento-based pot shop by the name of Canna Care.  The IRS has imposed an $873,000 penalty under a 30-year-old tax code known as “280E.”  The IRS is refusing to allow standard business expenses such as those incurred for payroll and rent.  This has always been the sticking point.

What makes this story a little different is that Canna Care is not the least bit interested in negotiating with the IRS.  The IRS has expressed a willingness to settle for $100,000 but apparently this pot shop has morals and will not pay a dime until ordered by a judge to do so in tax court.  After all, Canna Care is known as an “evangelical medical marijuana provider.”  Well, this is according to the Sacramento Bee article.

When I visited the Canna Care website ( I could not verify this unique designation.  In fact, many of the links on the website don’t work at all.  And probably the most frustrating is a video thumbnail of “the first commercial in history to be played on … a major US television station” (which I have to believe is really meant to read “the first medical marijuana commercial in history…”).  This “private video” can only be viewed with a password.  I suppose if I knew we would be going to court, I would want my client to keep quiet and minimize their internet footprint for a while too.

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Koskinen’s YouTube Debut as Commissioner

New Internal Revenue Service Commissioner, John Koskinen, delivered a special message to the nation via the IRS YouTube channel.  For many this is a video of first impressions.

On a side note, I’m not sure what the point of these videos is because regular taxpayers don’t watch them and those people that do watch (tax attorneys, CPAs, enrolled agents, and general tax professionals) don’t really benefit, as these videos normally consist of a series of ambiguous soundbites.

Koskinen’s message falls in line with other IRS videos: positive and hopeful, but lacking any kind of substance.  Here are the main points:

  • He got right to work after being appointed to his new position
  • He has been traveling around the nation taking the pulse of the IRS
  • The IRS is here to help taxpayers during 2014 tax season
  • Refunds will be issued quickly
  • The IRS will work to reduce tax fraud and ID theft
  • Over 120 million people filed their tax return electronically last year
  • Resources are limited & there will be long wait times if you try to call
  • Quicker way to get help:, tax software, tax professionals, IRS YouTube channel, IRS2Go smartphone app

As the new Commissioner of the IRS, I want to be up front with you and call it like it is, just as I have been doing my entire career.

~ John Koskinen, IRS Commissioner

My mom always told me to be skeptical of phrases that are prefaced with “I’m gonna be honest with you,” but whatever.  On the other hand, Koskinen was sufficiently stiff, boring, and unhappy in this video to convince me that he’s the right guy for the job.  He’s going to fit in just fine at the IRS.

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Beware of the “Turbo Tax audit”

With advancements in tax software and technology, it’s rare to find tax returns that are filled out by hand; without the assistance of a tax preparer or tax preparation software. These advancements have given rise to a whole market of self-preparation software. The most popular is Turbo Tax, but there are others.

With the popularity of these self-preparation tools and software, have come the aftermath, the Internal Revenue Service (IRS) tax audit. I personally like self-preparation tax software tools, like Turbo Tax, because they have led to business for me in what IRS examiners refer to as a “Turbo Tax Audit”. The key with the do-it-yourself software is whether you, the tax preparer, know what you’re doing because you don’t get the professional representation you didn’t pay for.

The software is advertised as easy to use and typically uses question and answer formats. To prepare your tax return, you answer questions posed by the tax preparation software, and plug in your data, and then your taxes are done. When there is trouble, it’s usually rooted in whether the tax preparer (you), answered the questions correctly for the purposes of the tax return. Because the computer software doesn’t know you or your situation, this is where you need to have some knowledge of taxes in general to ensure that you’re not taken on a path that will lead you to an appointment with my office, and eventually the IRS.

The self-preparation software sometimes offers “audit protection.” However, be sure to read the fine print as to the limitations and conditions of such “protection” should you want it, as there may be circumstances where your audit “insurance” is not covered. And, you’re again in my office or facing the IRS alone.

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IRS Updates Mobile App: IRS2Go 4.0

I don’t know about you, but when I get things “to go” it is usually some kind of delicious food tucked away in a bag that I will be enjoying at home.  It is definitely not my taxes, or my tax account, or my tax problems!  I don’t want that “to go” with me anywhere!  As you probably know, I’m not a fan of the IRS mobile app (“IRS2Go”) which was originally released in January 2011.  My dislike, apparently, begins with the name.

Today the IRS announced the release of the latest version, IRS2Go 4.0.  Maybe I’ll just let the users explain how bad it is:

    • “Doesn’t work”
    • “Neat looking app, but worthless”
    • “Crap”
    • “Disappointing”
    • “Seriously?!?”
    • “Update doesn’t work”
    • “What do you expect? It is the IRS”

There are some positive reviews, so at least some people have gotten it to work, but the average rating for all version is 3.5 and the average rating for the current version is 2.5.  It definitely looks like there are some bugs to work out in version 4.0.

I’m guessing that the most popular feature of the app is the Refund Status tab.  It is clear from reading several reviews that people who downloaded this app are mainly interested in checking the status of their refund.  It is probably also the IRS’ favorite feature since, if it works, fewer refund watchers will be tying up the phone lines.  And while this feature existed in prior versions, you could only ascertain whether or not (and when) your refund was processed.  In version 4.0 there is new functionality that allows you to track the status of your refund much like you would track a package coming to you via FedEx.  According to the IRS it “provid[es] taxpayers an easy-to-use feature to follow their tax return throughout the process.”

Two years ago 350,000 people had downloaded IRS2Go and now apparently that number has risen to 3.5 million.  Actually, the number of users can’t be tracked; it is the number of downloads.  So the 3.5 million likely includes every time somebody reinstalls for the new tax season, and also if somebody deletes it and reinstalls it 20 times because it isn’t working.

I’m sorry for the negative tone of this post.  Maybe I just love bashing IRS tech products. But at least I’m not the only one:

Don’t bother to download.  Since the update the app doesn’t work.  Not even worthy of a star, but I’m forced to give at least one.

~ IRS2Go 4.0 reviewer, Feb 5, 2014

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