Mastermind of IRS Phone Scam Gets 14 Year Prison Sentence

You would have to be living under a rock if you’re not aware of the pervasive IRS impersonation phone scams going around.  These scammers prey on the least-informed, most vulnerable people in society, convincing them that the IRS is on the brink of throwing them into prison for unpaid taxes when, in many cases, no taxes are owed.  Now at least one of the masterminds behind this, Sahil Patel (36), is going to be put away for 14 years.  Patel was sentenced a couple days ago in a U.S. District Court in New York for conspiring to extort, to impersonate government officials, and to commit wire fraud.

The government considers Patel one of the ringleaders in a scam that duped nearly 4,000 people out of a combined $20 million over the past two years.  However, this criminal group is obviously run by more than just Patel as the phone calls have not stopped since his conviction.

Maybe 14 years seems like a long time to you for a crime that doesn’t involve taking a life, but this is what the district judge had to say about it:

The nature of this crime robbed people of their identities and their money in a way that causes people to fee that they have been almost destroyed.

He definitely wanted to “ensure adequate deterrence.”  Plus I don’t think it helped that Patel came across as an “unfriendly” witness.  He reportedly made some sexist comments about the women he hired to do the dirty work and how they were ignorant and gullible.  I know that 14 years seems like a heavy penalty, and you can’t really expect a higher level of severity, but I wonder if this will really deter the co-conspirators who appear to be keeping the scheme operational.  The rewards are so incredibly high for them and, at this point at least, the risks seem to be just low enough.

We can increase the risk by finding more of these guys, and I think the IRS, in cooperation with law enforcement, is doing the best they can.  We can reduce the reward by informing the public — and this is where I think they can improve.  I started this article by saying that one would have to be living under a rock to not be aware of these phone scams, but I don’t know if that is true.  As a tax attorney, I hear about this kind of thing all the time because I am dialed into tax news and events.  But is the average taxpayer getting the message?  I think IRS public service messages are focused on tax professionals.  Maybe there should be a broader kind of outreach through TV and radio.  I suppose there is a reason why they haven’t gone there; maybe they don’t want to freak everyone out.

IRS Fails Taxpayers Again in 2015

Based on the interim report published by the Treasury Inspector General for Tax Administration (TIGTA), the IRS achieved a 38.5 percent Level of Service and a 24.6 average hold time on IRS phone lines during the 2015 filing season.  I don’t really know what Level of Service entails, but I know that 38 percent is really only good if we’re talking batting average.  You may be wondering, “How do you get such a low score?  I could probably score higher than 38 percent on a test by guessing.”  Well, this is how: you get 45.6 million phone calls and you answer only 4.2 million of them.  BAM.  Done.

Read the report.  It will make you cringe.

IRS Impersonation Scams More Prevelant Than Ever

TIGTA big shot, Timothy Camus, recently testified before the US Senate Finance Committee on the topic of “Tax Schemes and Scams.”  By TIGTA, I of course mean the Treasury Inspector General for Tax Administration.  And by “big shot,” I of course mean that he is the Deputy Inspector General for Investigations, and he wears a nice looking mustache, and he tells tax criminals that their day will come.

According to his testimony, IRS phone impersonation scams have quickly become one of TIGTA’s top concerns.  The agency had received only scattered reports of phone scams prior to the summer of 2013.  TIGTA started to track this crime in October 2013, and ever since then has kept statistics and concentrated efforts on eradicating this terrible, frustrating crime.

The way it works is the scammers call and threaten you with criminal penalties if you don’t pay a certain sum to address a tax problem that usually doesn’t even exist.  The victim is asked to load money onto a prepaid debit card and then call back with the card number.  These criminals used to target primarily the elderly or recent immigrants; the most vulnerable people who do not have sufficient command of the English language and/or those who do not have an understanding of the US tax system.  But Camus says that they have not been discriminating much lately.  He describes having received a call himself, at home, the weekend before his speech, and he told the guy, “your day will come.”  I have received phone scam calls too, most recently a very generic sounding recording using robo-call technology.

Here are some of the key phone scam statistics from Camus’ Senate testimony:

  • TIGTA has received over 366,000 complaints of phone scam calls (9,000 – 12,000 per week)
  • 3,052 victims paid out about $15.5 million
  • one poor fool paid over $500,000
  • 296 of these victims gave more than just money (i.e., social security number or other sensitive identifying information)

Camus says that this scam is the subject of an “ongoing multi-agency investigation.”  Let’s hope they figure out how to catch these guys because the IRS public service messages about how to avoid phone scams aren’t working as effectively as they should.

FTB Call-Back Service

There are many things that the California Franchise Tax Board (FTB) does that I would hope the IRS never adopts.  But some might appreciate it if the IRS would follow the example of the FTB when it comes to their customer service phone lines.

Clearly the IRS could never deliver the same level of customer service as a state taxing entity, due to the insanely large number of calls that IRS gets each day.  I don’t think anybody really expects them to compete on that level.  Likewise, it is naive to think that the state should be able to answer every call as it comes in without leaving taxpayers on hold.  However, FTB has figured out a way to make it much more convenient for the caller.  The FTB phone system has a feature that allows the taxpayer to request a call-back during times of heavy call volume.  The system estimates about how long you’ll have to wait on hold if you choose to hold, and then gives you the option of leaving your name and number and having a customer service rep call you back during that same time frame.

This call-back feature is handy for tax attorneys and tax practitioners, but it is especially useful for unrepresented taxpayers.  I have used the call-back feature a few times, but I typically do not mind holding either.  I often have a handful of cases that are queued up and ready to go once they pick up, and while I wait there’s always Instagram and TIGTA reports, but mostly Instagram.  But taxpayers calling in on their own case can be really discouraged by a 30+ minute wait, and it is nice to have the option of saving your place in line without actually waiting on the line.

I understand the administrative burden this feature would cause though.  It’s not a huge amount of extra work, but even a little extra work on such a large scale can be reason enough to just maintain the status quo.  IRS customer service has really gone down the toilet in the last few years, so really status quo wouldn’t seem too awful right about now compared to any additional slippage in service.

Tax Day 2014

It’s April 15th — tax filing deadline day!  From where I sit, there are only a couple more hours left to file your federal income tax return.  Today I should be writing about (and you should be reading about) procrastination, how to file an extension, what to do if you owe taxes and can’t pay, or various IRS statistics like how many returns have been filed, how many refunds have been issued, how much the IRS has paid out in refunds, etc.  Before the age of electronic filing, we used to see the obligatory TV news story about which post offices were open late and which ones had the longest lines.  But gone are the days of such innocent tax day topics.  Today I’m mostly seeing warnings about those pervasive telephone tax scams.

For as long as I can remember, the IRS has warned taxpayers of phony IRS calls, but it seems like it used to be an annual warning that came out in the “Tax Tips” series.  And it always seemed more like a theoretical problem with some anecdotal evidence here and there.  Today, however, these phone scams have become commonplace.  It doesn’t seem to matter where you live either; I’ve seen reports of phone scams all across the country.  And I’ve handled my share of calls from local taxpayers who have been scared out of their minds by phony IRS calls.  In Sacramento, some victims are being told that they are going to be arrested for tax fraud.  These scam artists are apparently very convincing.  Sometimes people who don’t even owe (and know that they don’t owe) are tricked into believing that they are in trouble with the IRS.

The IRS is very clear about what type of contact they initiate with taxpayers, and if you become familiar with the standard IRS warnings, you’ll never be fooled by a tax scam.

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!).

If you have to call TAS, at least dial the right number

 

photo via gretachristina.typepad.com

The Taxpayer Advocate Service (TAS) has two main phone numbers. 

  1. 877-ASK-TAS1 (established in 2004)
  2. 877-777-4778 (NTA toll-free line, established in 1998)

The NTA toll-free line is the more prominent number on the TAS website.  It is the number found under the “contact us” link.  And this is the same number listed on the IRS website.  However, the primary difference between these two numbers may surprise you.  ASK-TAS1 is staffed by TAS personnel, but the NTA toll-free line is actually staffed by IRS customer service personnel!  See the latest TIGTA report for more information.  These representatives are charged with vetting out the cases that they believe will “qualify” for TAS help.

TAS describes itself as an “independent organization within the IRS” — really an oxymoron, don’t you think?  Tax professionals have long questioned their independence.  When you call TAS, you are literally talking with the IRS (unless you dial the right number).  I do not recommend calling TAS for help with your tax problems.  For high-quality tax relief, it is important to select an experienced tax attorney that can give objective, unbiased attention to your tax matter.