Small Business Taxes & Management^TM--Copyright 2017, A/N Group, Inc.

The IRS is warning people to beware of a new scam linked to the Electronic Federal Tax Payment System (EFTPS), where fraudsters call to demand an immediate tax payment through a prepaid debit card. This scam is being reported across the country, so taxpayers should be alert to the details.

In the latest twist, the scammer claims to be from the IRS and tells the victim about two certified letters purportedly sent to the taxpayer in the mail but returned as undeliverable. The scam artist then threatens arrest if a payment is not made through a prepaid debit card. The scammer also tells the victim that the card is linked to the EFTPS system when, in fact, it is entirely controlled by the scammer. The victim is also warned not to contact their tax preparer, an attorney or their local IRS office until after the tax payment is made.

“This is a new twist to an old scam,” said IRS Commissioner John Koskinen. “Just because tax season is over, scams and schemes do not take the summer off. People should stay vigilant against IRS impersonation scams. People should remember that the first contact they receive from IRS will not be through a random, threatening phone call.”

EFTPS is an automated system for paying federal taxes electronically using the Internet or by phone using the EFTPS Voice Response System. EFTPS is offered free by the U.S. Department of Treasury and does not require the purchase of a prepaid debit card. Since EFTPS is an automated system, taxpayers won’t receive a call from the IRS. In addition, taxpayers have several options for paying a real tax bill and are not required to use a specific one.

Tell Tale Signs of a Scam:

The IRS (and its authorized private collection agencies) will never:

• Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. All tax payments should only be made payable to the U.S. Treasury and checks should never be made payable to third parties.
  
• Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  
• Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
  
• Ask for credit or debit card numbers over the phone.

For anyone who doesn’t owe taxes and has no reason to think they do:

• Do not give out any information. Hang up immediately.
  
• Contact the Treasury Inspector General for Tax Administration to report the call. Use their IRS Impersonation Scam Reporting web page. Alternatively, call 800-366-4484.
  
• Report it to the Federal Trade Commission. Use the FTC Complaint Assistant on FTC.gov. Please add "IRS Telephone Scam" in the notes.

For anyone who owes tax or thinks they do:

• View your tax account information online at IRS.gov to see the actual amount you owe. You can then also review your payment options.
  
• Call the number on the billing notice, or
  
• Call the IRS at 800-829-1040. IRS workers can help.

The IRS does not use email, text messages or social media to discuss personal tax issues, such as those involving bills or refunds. For more information, visit the "Tax Scams and Consumer Alerts” page on IRS.gov. Additional information about tax scams is available on IRS social media sites, including YouTube videos.

Other Points

In addition to those steps offered by the IRS on how you might protect yourself from scams, here are some other suggestions.

No surprise calls. On your first contact the IRS will not they will not be asking for money. The only time the Service will ask for money is if you forgot to include a 1099 or W-2 on your return or didn't make a payment with a return. And then in most cases you'll have an opportunity to challenge their determination. By the time the IRS is placing a lien on your property, you'll have had multiple contacts with the Service. Any call from them is not going to be a surprise.

Much the same is true of others looking for money--suppliers, the bank holding your mortgage, a credit card company, etc. The first few contacts are made by mail.

E-mails look better. Scam e-mails look far more professional than even a couple of years ago. Gone are the misspellings, poor graphics, etc. But there are still tip offs if you look carefully. Don't click if you're not sure. And if you're the least bit suspicious, call the bank, supplier, who supposedly issued the e-mail. Get an e-mail from a company you don't have dealings with? Delete it and move on.

Immediate response required. Some companies use the language to get a sale, but requiring an immediate response is one tip off that a scam is involved.

Think twice. Does it make sense? You get a call or e-mail saying your grandson is in jail in Spain and you have to send bail money immediately. Wouldn't he have told you if he was going to Spain? Or the widow of the Nigerian banker. Why would she be contacting you to help her move $20 million?

Change passwords. Yes, it's a big nuisance to change passwords regularly, but it's well worth the effort.

Ask a friend. Unfortunately, a lot of these scams are aimed at older individuals, immigrants, etc. Ask your son or daughter, a friend or neighbor, etc. what they think. It helps if they're financially or computer savvy, but any second, independent opinion, can be useful.

Check your accounts regularly. It's almost impossible to stop all hackers and scams, but you can reduce the damage by checking your account regularly. If you go online, you can check it weekly or even daily to see if you spot any unusual activity. If you just deal in paper, check your statement as soon as you receive it.

--Last Update 06/16/17