Tax fraud1has a pretty broad definition. It occurs when someone purposely falsifies information on a tax return for their own personal gain. They might report false income, claim false deductions or expenses, or use a false social security number to file an altogether false income tax return. It becomes a tax scam when a fraudster intentionally deceives an innocent party with the intention of somehow making them the victim of their fraudulent scheme. They might use your name, address, and social security number to file a fraudulent tax return.
As tax season approaches, many people will begin to get their finances in order. Others of course, will wait until the last minute. Be advised however, that fraudsters do not procrastinate. Sadly, there are bad actors out there looking to swindle the unsuspecting during tax season. Your cash, your credit, even your identity could be their objective. But if you arm yourself with a basic understanding of a few Internal Revenue Service (IRS) policies, you’ll be better equipped to avoid being misled by scammers. Here are three facts you can rely on when it comes to the IRS.
To chat with a representative or report potential fraud, contact Member Services at (512) 467-8080 or (800) 252-8311.
The IRS Will Never Cold Call You About Debt
Their policy is to always mail you a bill first. So if you have not received a physical letter in the mail, the call could be suspect. It is possible however that a letter was lost in the mail or your address is not current. To be sure, you can ask the IRS representative to allow you to call them back at (800) 829-1040. You could also ask to speak to someone in the fraud department, or express your concern about recent phone scams. Any legitimate IRS employee will be happy to comply.
The IRS Will Never Demand Immediate Payment
Their policy is to allow you the opportunity to appeal, and even set up a payment plan, in which you can define how you pay. They would never require that you use any specific payment method, least of all a prepaid debit card. And they would never suggest that you share any debit or credit card information over the phone. Any requests along these lines are very likely fraudulent.
The IRS Will Never Threaten You
A legitimate IRS representative will never intimidate you or make threats of legal action. They would never involve local police or any other law enforcement agency for that matter. If a supposed representative uses these kinds of tactics, it is highly likely that you are speaking to a scam artist at work.
If someone claiming to be with the IRS does any of these things, report them immediately. You can also call the IRS Tax Fraud Hotline recording at (800) 829-0433 to learn more.
1 UFCU does not provide tax or legal advice. For such guidance, please consult a tax and/or legal advisor.
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FAQs
Three Things the IRS Will Never Do
- The IRS Will Never Cold Call You About Debt. Their policy is to always mail you a bill first. ...
- The IRS Will Never Demand Immediate Payment. ...
- The IRS Will Never Threaten You.
The duties of the IRS include providing tax assistance to taxpayers; pursuing and resolving instances of erroneous or fraudulent tax filings; and overseeing various benefits programs, including the Affordable Care Act.
What is the IRS 3 out of 5 rule? ›
An activity is presumed for profit if it makes a profit in at least three of the last five tax years, including the current year (or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses).
What is the new IRS question that must be answered? ›
Everyone who files Forms 1040, 1040-SR, 1040-NR, 1041, 1065, 1120, 1120 and 1120S must check one box answering either "Yes" or "No" to the digital asset question. The question must be answered by all taxpayers, not just by those who engaged in a transaction involving digital assets in 2023.
What money can the IRS not touch? ›
Certain retirement accounts: While the IRS can levy some retirement accounts, such as IRAs and 401(k) plans, they generally cannot touch funds in retirement accounts that have specific legal protections, like certain pension plans and annuities.
What is the most common mistake made on taxes? ›
6 of the Most Common Tax Return Mistakes:
- Missing Identifying Information. ...
- Making Math Mistakes. ...
- Claiming the Wrong Credits or Deductions. ...
- Putting the Wrong Bank Account Information. ...
- Choosing the Wrong Filing Status. ...
- Forgetting to Sign Your Return.
Generally, an underpayment penalty can be avoided if you use the safe harbor rule for payments described below. The IRS will not charge you an underpayment penalty if: You pay at least 90% of the tax you owe for the current year, or 100% of the tax you owed for the previous tax year, or.
What is the IRS 33% rule? ›
The organization must normally An organization must normally not receives more than one-third of its receive more than one-third of its total total support in each taxable year support from the sum of: from the from the sum of: a. Gross investment income, and a. Gifts, grants, contributions, membership fees; and and b.
What is the IRS $75 rule? ›
the person entertained and their connection with your business, • the business purpose, • the date, time, and place, and • the cost of the expense. In addition to recording the information in your account book, etc., receipts are required for all expenses of $75 or more.
What is the number one most requested form from the IRS? ›
Form 1040. Annual income tax return filed by citizens or residents of the United States.
Use Where's My Refund, call us at 800-829-1954 (toll-free) and use the automated system, or speak with a representative by calling 800-829-1040 (see telephone assistance for hours of operation). If you filed a married filing jointly return, you can't initiate a trace using the automated systems.
What crypto wallet does not report to the IRS? ›
Some cryptocurrency exchanges do not report user transactions to the IRS, including: Decentralized crypto exchanges (DEXs) like Uniswap and SushiSwap. Some peer-to-peer (P2P) platforms. Exchanges based outside the US that do not have a reporting obligation under US tax law.
What can the IRS not take from you? ›
The IRS can't seize certain personal items, such as necessary schoolbooks, clothing, undelivered mail and certain amounts of furniture and household items. The IRS also can't seize your primary home without court approval. It also must show there is no reasonable, alternative way to collect the tax debt from you.
What can the IRS take from you? ›
It can garnish wages, take money in your bank or other financial account, seize and sell your vehicle(s), real estate and other personal property. If you receive an IRS bill titled Final Notice of Intent to Levy and Notice of Your Right to A Hearing, contact us right away.
How does the IRS catch you? ›
Selection for an audit does not always suggest there's a problem. The IRS uses several different selection methods: Random selection and computer screening - sometimes returns are selected based solely on a statistical formula. We compare your tax return against "norms" for similar returns.
Does the IRS go after everyone? ›
Most people can still breathe easily, however, because the majority of individual returns escape the audit machine. In recent years, the IRS has audited significantly less than 1% of all individual tax returns.
