This tax season, as in years past, we noticed an uptick in people calling our office about tax concerns. Among these, a fair number were surprised to learn that they hadn’t been contacted by the IRS at all. They had instead been the target of a fairly common scam.
The scenario we’ve heard for years goes like this. Somebody calls you and claims to work for the IRS. They say you owe back taxes or some other penalty and your account is now so delinquent that unless you make a payment immediately, the sheriff will be sent to arrest you. Some of these scams will even bring someone else on the line or have a second person call you, in both cases claiming to be the sheriff or a police officer, all to make the situation seem more legitimate and to convince you to pay up.
But if something like the above happens to you, it is almost certainly a scam. The IRS’s first method of contacting a taxpayer is always by a mailed notice. Moreover, although the IRS can garnish your wages and levy your bank accounts to collect the tax you owe, no one from the IRS is ever going to call you and demand a payment over the phone and hold the threat of immediate arrest over your head. It’s just not how the IRS operates.
These scams work because people are unfamiliar with the IRS’s operations. They also play off a kernel of truth. It’s possible for issues with the IRS to lead to criminal prosecution, of which jail time is a possibility. But even in such a scenario, it won’t be the situation as the scammer on the phone tries to describe it and a routine collections case is very unlikely to get to that point.
The actual IRS procedure for collection begins with a mailed notice. This will set out what is owed and for which tax period(s) the liability applies. Late taxes accrue both interest and penalties until they are paid in full. Penalties can be waived for extenuating circumstances, while interest is almost never waived. If you cannot full pay the tax owed, you can request a payment plan. For smaller balances, the IRS typically approves such an installment agreement as a matter of course. If the amount owed is larger, they require financial information from the taxpayer first. Another option is what’s called an offer in compromise (OIC). In an OIC, you make the IRS an offer, either a flat payment or installments, that is less than the total amount you owe. The IRS considers OIC’s based on the circumstances, namely your ability to pay.
However much is owed or whatever specific issues arises with the IRS, representation by experienced counsel can help you navigate the process more smoothly and achieve the best results including favor terms to installment agreements and getting penalties waived. Horowitz Law Offices represents taxpayers before the IRS. You are welcome to contact us at (312) 787-5533 or firstname.lastname@example.org