IRS Warns About Two New Tax Scams

In IR-2003-63, the IRS warns about two new scams.  One targets families serving in the military and the other aims at e-mail users.  In both scams, people misrepresent themselves as being from the IRS. 

In the first scam, a family member is told that s/he is entitled to a $4,000 refund because a relative is in the military and is asked for a credit card number to cover $42 fee for postage.  The caller gives a valid IRS toll-free number so the call seems legitimate.  Once the caller has the credit card number it is used to make unauthorized charges. 

Victims of the other scheme receive an e-mail that looks like it comes from the IRS.  It includes links to a non-IRS Web page that asks for personal and financial information.

The IRS notes that it (1) does not require a fee to get a refund, (2) does not ask for sensitive personal information by e-mail, and (3) does not ask for credit card numbers.  

If any of the above is experienced or suspected, contact the Treasury Inspector General for Tax Administration (TIGTA) either (1) on its toll-free fraud hotline, 800-366-4484, (2) by fax to 202-927-7018 [NYC area code], or (3) by mail to TIGTA Hotline; Box 589, Ben Franklin Station; Washington, DC 20044-0589. 

TIGTA’s web site is www.ustreas.gov/tigta

IRS Requests a Copy of Tax Return from the Taxpayer

In a new twist, the daily newsletter “Highlights & Documents” (by Tax Analysts) reports, in its May 9 issue, a letter received by a taxpayer that starts: “Your Federal income tax return has been selected for inspection… [but] we would appreciate  it if you could send us a complete copy of your form….” 

Note that the letter says the copy is for inspection, not audit—wherever this may lead.  Also, the request is for a partnership return, something that I don’t believe that tax clinics handle, but this could be an example of another non-routine practice to watch for.

The letter says that the IRS field auditor has a computerized copy of the return (for a partnership) but that it lacks the supporting forms and schedules that were attached.  It says that since “obtaining the original return from storage (Service Centers) is time-consuming” because the IRS is in a restructuring phase, the auditor would appreciate a complete copy of the 2001 partnership return.

“Your prompt response to our request will help us expedite the process.  We appreciate your compliance with this matter.  Again, for now, this is a request for a copy of your tax return for inspection purposes only.”

Most practitioners who Tax Analysts showed the letter said they had never seen anything like it.  The IRS said the same.  The Service’s spokesman said that the letter was unusual and did not look like a typical form letter.  He did note, however, that field personnel have some leeway, where appropriate, to send letters that are not “a complete form.”

A spokesman for the National Society of Accountants’ Federal Taxation Committee noted that a taxpayer is likely to react to a letter like this is, at best, a search warrant and, at worst, an arrest warrant.  Many taxpayers, he said, might even send in their workpapers.

The H&D story notes that Sandy Freund, codirector of the Rutgers Federal Tax Clinic in Newark, NJ, says that it is never fair for the IRS to ask for a return that has been filed.  The letter raises many questions, says Freund, including what happens if the copy is not sent. 

She notes that the computerized printout probably has enough information for the IRS but without the original return the Service may not be able to make a valid assessment.  When she worked in a district counsel’s office, Freund says that if the taxpayer’s copy lacked the original return the IRS attorneys considered the case conceded unless they could settle.  Of course, she adds, the IRS didn’t tell the taxpayer they didn’t have the original return.

Another clinic director suggested that the taxpayer might decide to lay low to see what happens.  A member of the National Association of Enrolled Agents says that when receiving an intent-to-examine letter she asks the agent if s/he has the return as filed.  If not, she may send something to get the matter resolved quickly—but the story does not say whether this is a copy of the return or something else.