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IRS Warns of Back-to-School Scams

The IRS is warning against telephone scammers targeting students and parents during the back-to-school season and demanding payments for non-existent taxes, such as the “Federal Student Tax.”

People should be on the lookout for IRS impersonators calling students and demanding that they wire money immediately to pay a fake “federal student tax.” If the person does not comply, the scammer becomes aggressive and threatens to report the student to the police to be arrested. As schools around the nation prepare to re-open, it is important for taxpayers to be particularly aware of this scheme going after students and parents.


Scammers are constantly identifying new tactics to carry out their crimes in new and unsuspecting ways. This year, the IRS has seen scammers use a variety of schemes to fool taxpayers into paying money or giving up personal information. Some of these include:

  • Altering the caller ID on incoming phone calls in a “spoofing” attempt to make it seem like the IRS, the local police or another agency is calling.
  • Imitating software providers to trick tax professionals — see IR-2016-103.
  • Demanding fake tax payments using iTunes gift cards — see IR-2016-99.
  • Soliciting W-2 information from payroll and human resources professionals — see IR-2016-34.
  • “Verifying” tax return information over the phone — see IR-2016-40.
  • Pretending to be from the tax preparation industry — see IR-2016-28.

If you receive an unexpected call from someone claiming to be from the IRS, here are some of the telltale signs to help protect yourself.

The IRS will never:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail you a bill if you owe any taxes.
  • Threaten to immediately bring in local police or other law-enforcement groups to have you arrested for not paying.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Ask for credit or debit card numbers over the phone.

If you get a suspicious phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:

  • Do not give out any information. Hang up immediately.
  • Search the web for telephone numbers scammers leave in your voicemail asking you to call back. Some of the phone numbers may be published online and linked to criminal activity.
  • Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page or call 800-366-4484.
  • Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on Please add “IRS Telephone Scam” in the notes.
  • If you think you might owe taxes, call the IRS directly at 800-829-1040.

Here Come the Private Tax Debt Collectors … Again

Seven things you need to know about the upcoming IRS program


There are almost 19 million people who owe more than $400 billion in back taxes to the U.S. Treasury.

Right now, 4 million taxpayers are paying the IRS through installment agreements, and the IRS is chasing 7 million more taxpayers for payment.

In late 2015, Section 32102 of the Fixing America’s Surface Transportation, or FAST, Act was put into law, requiring the IRS to use private debt collectors for delinquent tax debts.

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The details of how the IRS implements this program will determine how successful it is – and how it will impact taxpayers and their advisors.
Previous attempts

This is the not the first time the IRS has been instructed to use private debt collectors.

The first attempt started in 1996 and lasted a little more than a year. The second lasted from 2006 to 2009. The first program collected about $3 million, at a cost of more than $1 million. The 2006-2009 program yielded $98 million, at a cost of $47 million.

During these initial attempts, there was widespread concern about how private debt collectors treated taxpayers and their personal information. The private debt collectors didn’t necessarily explain all the available payment options to taxpayers facing economic hardships. Those options include alternatives to full payment, such as installment agreements and penalty abatement. Many taxpayers were also concerned that private debt collectors would share their tax information.

Ultimately, the government scrapped both programs because they weren’t cost-effective and were fraught with potential risks to taxpayer rights and privacy.
Suspicions raised

Enter the third wave of private debt collectors, set to begin in the next few months. This time, the IRS faces new challenges in implementing the program, because the information security landscape has changed a great deal since 2009.

Today, taxpayers are increasingly wary of IRS imposter phone schemes that are prevalent during tax season and all year long. When private debt collectors call taxpayers this year, collectors will face skeptical individuals, wary of IRS imposters trying to scam them into paying “taxes” over the phone.
Seven facts you need to know

  1. It’s coming soon. The IRS plans to select its authorized private debt collectors in the next two months and then begin using them in early 2017. The IRS will publish the names of these collectors on
  2. Private debt collectors will try to pursue the old, uncollectible accounts. The IRS wants private debt collectors to go after cases the IRS would never pursue – that is, outstanding, inactive receivables. The case criteria for private debt collectors are:
  • More than one-third of the 10-year collection statute has expired;
  • No IRS employee is assigned to collect the debt; and,
  • The IRS hasn’t contacted the taxpayer in a year, and the taxpayer isn’t requesting a payment alternative or relief (such as innocent spouse relief, a collection due process hearing, an offer in compromise, an installment agreement, etc).

Private debt collectors won’t pursue taxpayers younger than 18, those who have been a victim of tax identity theft, or taxpayers in a federally declared disaster area or combat zone.

  1. The private debt collectors will try to locate “missing” taxpayers. When the IRS can’t locate taxpayers, it removes them from active collection. In the FAST Act, private debt collectors will pursue those accounts. As the National Taxpayer Advocate has pointed out, the methods these collectors might use to find and collect from these taxpayers could conjure up fears about how the IRS will protect taxpayer rights, information, and privacy.
  2. Private debt collectors won’t have enforcement authority. Private debt collectors won’t be able to file liens or issue levies. Keep in mind, however, that the IRS may have already filed a tax lien on some taxpayers before the private debt collector ever calls. Collectors also won’t be able to help taxpayers get liens removed. To address enforcement actions, taxpayers or their advisors will need to contact the IRS directly.
  3. Collection alternatives are still available through the IRS. If taxpayers need a payment alternative, such as an installment agreement, currently not collectible status, or an offer in compromise, they should contact the IRS.
  4. The IRS will notify taxpayers if a private debt collector is assigned to their case. Before starting the private collection process, the IRS and the collector will send two letters:
  • First, the IRS will send a letter notifying the taxpayer that the IRS has assigned their case to a private debt collector.
  • Second, after assignment and before contacting the taxpayer, the private debt collector will send a letter.

According to the IRS, these notices will also go to the taxpayer’s representative on file, if any. The IRS hopes that these steps will notify taxpayers of the impending collection and relieve their fears about IRS imposter schemes.

  1. Taxpayers experiencing economic hardship aren’t included. Taxpayers who are experiencing severe economic hardship and have an outstanding tax debt can apply for a special status that suspends their obligation to pay (referred to as currently not collectible status). Taxpayers who have negotiated this status with the IRS appear to be excluded from the private debt collection program. The IRS has not finalized this exclusion, but it appears likely that these taxpayers would be treated similarly to those who have requested a payment agreement with the IRS on their outstanding debt.

Third time’s a charm?

Navigating the IRS can be difficult. With imposter schemes running rampant, adding a third-party collector to the mix could add to taxpayer confusion.

According to IRS plans, taxpayers and their advisors should expect two letters to come before a private debt collector calls. And if a legitimate collector calls for payment, taxpayers and their advisors should first consider whether the client qualifies for a payment alternative with the IRS.

Congress hopes that the third private debt collector program will work better than the previous two initiatives. Time will tell, because the third round starts soon.

Jim Buttonow, CPA/CITP, directs tax practice and procedure product development for H&R Block. He has more than 28 years of experience in IRS practice and procedure.