Watch Out for Those Fake IRS Letters

Article Highlights:

• Matching Season
• IRS Letters
• Fake Letters
• Demand for Immediate Payment

Every year, the vast majority of taxpayers file their returns with the IRS between the end of January and the April due date. However, the IRS does not just take taxpayers’ word regarding the information on their returns.

For this reason, tax season is followed by “matching season,” when the IRS attempts to match the information on each taxpayer’s return with the information from the various returns that other entities (employers, financial firms, educational institutions, the insurance marketplace, etc.) have filed. The goal is to identify possible accidental oversights and intentional omissions.

When the IRS finds a discrepancy, it sends the taxpayer one of many form letters to detail the discrepancy and to describe the options for dealing with the issue. Receiving such a letter inevitably causes a person’s heart rate to jump a little; everyone dreads receiving correspondence from the IRS.

Is the Letter Real?

Thieves know the time of year when the IRS sends correspondence to taxpayers, so they send fake letters to trick people into making payments on bogus tax liabilities. As a result, taxpayers need to be very careful to avoid being hoodwinked by these scammers. The best practice is to have a tax professional review any letter that you receive before you take any action. If the letter is real, it requires a timely response, but if it is fake, it should be ignored.

These crooks take advantage of the anxiety that comes with receiving a letter from the IRS; they are counting on the likelihood that you will rush to make the potential problem go away. For instance, most of these fake letters demand immediate payment and threaten arrest if payment isn’t made. Such language should make your scam alarm go off, however; the IRS never demands immediate payment or threatens arrest. These thieves also often ask individuals to make payments by providing them with the serial numbers of prepaid stored-value cards. This allows them to quickly access the money and then vanish. Any such request should also alert you to the scam attempt, as the IRS would never collect payments that way.

We encourage you to educate your family members – especially older ones – about these fake letters so that they do not fall for the scam.

Of course, it goes without saying that, if you receive a real letter from the IRS, you should not procrastinate. A timely response is necessary to prevent the IRS from escalating the situation.

We strongly recommend calling us or scheduling a complimentary consultation if you receive any correspondence from the IRS so that we can review its validity and, if necessary, respond to it in a timely and correct manner. In addition, beware of phone calls, texts, and e-mails claiming to be from the IRS; this should also set off a scam alarm, as the first contact from the IRS on a given matter is always by U.S. mail. These clever crooks are trying to separate you from your money, but you can stop that from happening. Don’t be scammed. 

This is general information and should not be acted upon without first determining its application to your specific situation. Please contact us, your CPA or tax adviser for additional details.