It’s not often we tell clients to disregard the IRS. Tax professionals take IRS notices and compliance activity seriously.
But when the “IRS” calls your client, it probably isn’t really the IRS.
Most of the time, it’s an IRS impersonator.
Believing that the IRS isn’t calling can be hard for clients. This is especially true when callers use high-pressure tactics to demand that the taxpayer pay right away or suffer immediate ramifications, such as an arrest or property seizure.
Even worse, many of these scammers follow IRS contact protocols, such as providing an agent identification number at the start of the call. In fact, news outlets have reported that impersonators have been able to trick all kinds of taxpayers, even those who seem sophisticated but who don’t know how the IRS works.
Scams play right into taxpayers’ greatest fears.
In 2014, the IRS Oversight Board reported that one of the top reasons taxpayers voluntarily file and pay every year is because they are afraid of being audited or contacted by the IRS.
This fear also drives many taxpayers to use tax professionals to help them file tax returns and deal with the IRS if an issue comes up.
That’s why you should give your clients one rule of thumb if the “IRS” calls: Hang up.
Explain how the IRS really works.
Telling your client to hang up sounds bold and even uncooperative, but in today’s environment, it’s necessary to protect your client. In fact, the Treasury Inspector General for Tax Administration (TIGTA), who investigates IRS-impersonator scams, indirectly gave this advice in an alert issued Oct. 15, in response to the latest scam soliciting immediate payment by debit cards. According to TIGTA, the IRS-impersonator problem is alarming, with about 736,000 reported attempts in the past two years.
If your clients are unsure how to tell whether the IRS is calling, let them know how the IRS really works:
With the rarest of exceptions, the IRS never calls first; it will send a notice.
In the uncommon circumstances that the IRS does call, the taxpayer probably has serious compliance issues and is likely well aware of the problem.
The IRS pursues few criminal tax cases.
Most impersonators threaten arrest or other serious consequences. But you can explain the numbers to your clients to alleviate their fears. In 2014, the IRS prosecuted fewer than 2,000 criminal tax evasion cases. And clients who are subject to an audit would receive a notice or have the right to request a notice before they have to respond to any IRS phone contact.
Your clients can also direct the caller straight to you.
If your client is uncomfortable hanging up, your client should ask the caller to send a notice and to directly call you, his or her tax professional.
All taxpayers should know that they have the right to be represented by a tax professional. If the caller issues any additional empty threats, your client can reply in the same way: “Send me a notice and contact my tax professional.”
Go further to protect your client with a power of attorney.
You can help your clients in a more proactive way by directing any legitimate IRS contact straight to you. File a Form 2848, Power of Attorney and Declaration of Representative, on behalf of your client. You’ll be copied on your client’s IRS notices and receive any potential phone contact. Then your client will have full confidence that you should handle any IRS contact.
Keep in mind that this strategy is not without risk, as you are now the taxpayer in the eyes of the IRS. This responsibility requires that you act in compliance with all of the provisions under Circular 230, Rules Governing Practice Before the Internal Revenue Service, including agreeing to promptly address all of your client’s IRS issues with the IRS. Many tax professionals charge an additional fee for this service, because of the potential liability associated with this additional responsibility.
In the rare event that the IRS would actually call your client, your client can say the same line: “Call my tax professional.”
Jim Buttonow, CPA, CITP, directs tax practice and procedure product development for H&R Block, and serves as chairperson of the IRS Electronic Tax Administration Advisory Committee (ETAAC). He has more than 28 years of experience in IRS practice and procedure.