Last week, the Internal Revenue Service and its Security Summit partners issued an alert warning of “fake tax bills” for tax year 2015 that some taxpayers and tax preparers have received in the form of emails seeking additional tax payments related to the Affordable Care Act.
The agency also released the names of four outside contractors that, beginning in 2017, will serve as private collectors of “certain overdue federal tax debts” called for by 2015’s Fixing America’s Surface Transportation Act, or FAST Act.
The fraudulent emails reported around the country include a fake CP2000 notice with an Austin, Texas address as an attachment. CP2000 notices, sent when income on a taxpayer’s tax return does not match income reported to the IRS by third parties like employers, are sent by the IRS’ Automated Underreporter Program through the U.S. Postal Service; not by email, the warning states.
The agency said the fraudulent emails include a “payment” link within the email, seeking the payment of taxes and information about the taxpayer’s 2014 Affordable Care Act coverage.
The IRS said taxpayers or preparers can determine if a CP2000 notice received in the mail is real by viewing an image of an actual notice on its website: Understanding Your CP2000 Notice. The IRS also encouraged recipients of the fake email to forward it to email@example.com and “then delete it from their email account.”
The IRS’ Security Summit partners are state tax agencies and members of the private-sector tax industry who are cooperating on a public awareness campaign to fight various tax-related scams.
Private Tax Collectors Named
On Sept. 26, the IRS released the names of four private-sector contractors who starting next spring will begin tax collections of “certain overdue federal tax debts,” under a bill signed Dec. 4, 2015 by President Obama. That bill, the Fixing America’s Surface Transportation Act, aka “FAST Act,” is a transportation funding bill; to help fund that bill, Section 32102 of the bill gives the IRS the right to hire private-sector collectors to act on its behalf to recover certain inactive tax receivables.
The IRS said the companies “must respect taxpayer rights including […] abiding by the consumer protection provisions of the Fair Debt Collection Practices Act.” The four companies hired by the IRS are:
• CBE Group of Cedar Falls, Iowa
• Conserve of Fairport, New York
• Performant, of Livermore, California
• Pioneer, of Horseheads, New York
In a statement, the IRS said it will give “each taxpayer and their representative written notice that their account is being transferred to a private collection agency. The agency will then send a second, separate letter to the taxpayer and their representative confirming this transfer.” Representatives of the four firms “must be courteous and respect taxpayer rights.”
Further, the IRS said it will do “everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities, particularly in light of continual phone scams where callers impersonate IRS agents and request immediate payment.”
There was criticism of the FAST Act provision calling for outside agencies to collect older tax revenues, partly because it had nothing to do with transportation and partly because the IRS has had mixed success in two previous periods—1996 to 1997 and 2006 to 2009—when it used private agencies to collect past-due taxes. When it ended the last private collection program in 2009, then-IRS Commissioner Douglas Shulman said that “after a thorough review of this program, I have decided not to renew the contracts,” and that “I believe this work is best done by IRS employees,” who he said had “more flexibility” in collecting the past-due taxes than did the private vendors.
Shulman said at the time a cost-effectiveness study of the private debt collection program “showed that it is reasonable to conclude that when working similar inventory, IRS collection is more cost effective than the contractors.”
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