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The “IRS Investigations” Scam

Posted on Dec. 18, 2013

A few years ago I assisted a nice gentleman in navigating OVDI.  He was not the type of individual who the Service was really targeting; just someone who had made a few minor mistakes.  I am sure he did not like writing the check to the Service, or to me, but he had not complied 100% in some prior years and was happy to ensure all potential problems were handled.  Last year, he wrapped everything up, and was thrilled to have this in his past…

Until last week, when he was called by someone from “IRS Investigations”.  The person, who would not give his name or location, first indicated the issue had to do with his 2013 tax filing.  When my client pushed back, he indicated that it had to do with the last ten years. The individual repeatedly stated this was very important, and serious consequences would happen if my client did not comply.  My client was directed to contact Damon Marshall with IRS Investigations at 347-559-7963, otherwise there would be dire results.  My client highlighted that the Service usually sent paper notices regarding issues (somewhat true) and did not just call out of the blue.  At that point, the call ended.

My client was skeptical, but called my office, indicating that there may be some issue with the OVDI disclosure.  By the time I listened to my voice mail, my client had already emailed me and indicated he figured out what you all knew.  This was a scam.

My client traced the phone number he was given back to Richmond, New York, which is on Staten Island.  The number is apparently listed to a William Jones.  Neither of us have any idea whether Mr. Jones is involved in the scam.

This scam, involving the name Damon Marshall and perhaps this number, has been around since at least May, and various scam buster web pages have it listed.  The Service currently has a posting about these types of scams, specifically ones requesting wire transfers or prepaid debit cards to pay taxes, which can be found here.

This particular scam, or some version, was discussed at the Low Income Tax Clinic Conference last week, which Keith took part in.  Most people targeted by the scam have had federal tax liens filed against them, making the tax liability public.  Interestingly, my client does not have a federal tax lien filed against him, and to the best of my knowledge never has.  Similarly, there is no public record of any of his dealings with the IRS.  We may be looking into this to see if the call was a coincidence, or perhaps information was compromised.

Mining tax lien filing records is not new, but in the past the companies trying to profit from the fear mongering usually did so with mailings, sometimes attempting to look like Service mailings.  This Forbes article touches on these mailings.  This is just one of the many types of unethical behaviors engaged by the groups targeting these individuals.  I know we are all sad to no longer see Roni Lynn Duetch yelling at us on TV about “pennies on the dollar”, or the Tax Masters commercials, with the world’s most underwhelming pitch man, but it was good that these two were put out of business.  They provided unreasonable expectations, took large sums of money from distressed individuals, and provided essentially no benefit in most cases.  Unfortunately, other companies continue to spring up and even less scrupulous companies and scammers get even more aggressive in trying to prey on these folks.

The person who called my client was less sophisticated than other scammers, who will somehow change the caller ID to look like the Service is calling, and may even use the names of actual IRS employees and provide fake Service ID numbers.  There have also been instances where the scammers know some key information about the person, such as date of birth, and the last four digits of a social security number.

My client is very intelligent, well educated, and does not currently have an issue with the IRS, but it is understandable why he and other people do not just ignore these scammers.  Usually the person does have a tax issue, may be somewhat desperate, and could be less well equipped to spot the scam due to various reasons.  Further, we all know that blowing off the IRS can be a bad idea.

At a minimum, if you hear of something questionable, it should be reported to the Service or TIGTA.  Even if the Service already knows about the scam, I think it is important that they know how prevalent it is.   Tax fraud and scams can be reported to the Service, and the information for reporting them can be found here.

Keith shared with me that each semester he gets one or two clients who come into the clinic who have responded to one of the mailings described above or hired one of the tax settlement companies.  He said that the cases usually involve offer in compromises, which we all know requires a significant amount of time and effort to properly document.  The taxpayer usually pays over a large sum up front, at which point the effort level of the tax settlement company drops off precipitously.  The company may submit a partially completed offer, but is usually not around to answer the Service questions to actually obtain relief.

In the Forbes article above, the author offers a suggestion that others have put forward before regarding the criminalization of using tax lien information to solicit business.  I think this and other ideas should be considered, especially as the scammers get more aggressive and prevalent.  I know at least one of my co-bloggers thinks criminalizing this type of behavior would not be a good idea.  There are valid commercial uses, such as determining credit scores, and there are already other laws that could be used against these scammers (Roni Lynn Duetch will make a commercial about those and bankruptcy soon).  Perhaps this is just a resource issue, and investigating each small time scammer is too expensive.  It would be nice, however, if we could find a way to stop the tv and radio advertisements stating, “do you owe $10,000 or more, because the IRS can take everything you own and put you in jail.”  Those drive me crazy.

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