Many of you may have seen that the IRS was hacked again recently and personal data was compromised.  My partner, Wayne Zell, was one such victim and he recently blogged about his arduous experience of proving who he was to the IRS once he received a letter from them.

Unfortunately, his experience is becoming all too common. Another partner, Eric Horvitz, also recently had an experience in which he received robot calls on his cell phone supposedly from the IRS telling him that he would be sued within days unless he returned the call. Although Eric knew it was a scam, he was curious and returned the call using his office phone and was asked to provide personal information. Once the person on the other end of the line knew that Eric understood this was a scam, the person hung up. Eric then provided the following valuable reminders:

1. The IRS will never initially contact you by phone.  You will first receive a letter.  If you paid all of your taxes for a prior tax year, then a legitimate letter from the IRS likely will say that your tax return is being audited in some fashion.  If you did not pay all of your taxes for a prior tax year, then a legitimate letter from the IRS likely will be a bill that requests payment.  Your failure to address an initial IRS letter in a timely fashion will result with a follow up letter from the IRS in some fashion.

    

2. If after receiving a letter (or likely letters) from the IRS, the IRS does call you. The IRS employee always will provide his name and should give his IRS employee number.  Ask what office the IRS is calling you from and later verify that the given IRS office does exist.  A legitimate phone call from the IRS likely means that you have ignored all prior letters from the IRS.  The person calling you likely is either a “revenue agent” – the IRS employee who will audit your return – or a “revenue officer” – the IRS employee who will demand payment.

    

3. The IRS will never call you threatening to sue you.  Again, you always will get some sort of letter in the mail.

    

4. Never call these scam artists back.  They are out to get your personal information in any way and your money.  Simply by calling them back on the telephone number on which they called you will give them a source of information with which they can steal your identity.

    

5. The IRS neither asks nor requires you to use a specific payment method for your taxes, such as a prepaid debit card – the 21^st century version of cash — which likely will have no origin through the banking system.

    

6. The IRS will never threaten that the “police” will arrest you.  The IRS does have its own police officers.  They are called “special agents.”  If you are contacted by a special agent, then you likely will know why the IRS has contacted you.  In that case, tell the special agent to have a nice day and also tell him that your attorney will contact the special agent.  Then, get an attorney.  You will need one.

As if matters are not already difficult when dealing with the theft of your own identity, for those who have recently lost loved ones and are having to deal with filing final tax returns, the process has become even more complex because of the amount of identity fraud. It is not uncommon for a fraudulent tax return to be filed using a deceased person’s social security number that claims any refund. Usually, executors do not know it has happened until they go to file the final tax return and their filing is rejected.

The process for undoing the damage of the stolen identity can and will take months to resolve. Because there has been so much fraud, the IRS has started responding to requests for information about a deceased’s person’s tax returns with a letter indicating that they will not provide any such information until the executor (or perhaps the CPA or attorney) calls and proves the executor has authority to ask for and receive the tax information.  The call alone can take hours with you just sitting on hold.

There are ways that you can notify the IRS of your authority as an executor through particular IRS forms that are filed with the IRS. An experienced estate and trust administration attorney or CPA can guide you through that process and help complete the forms and get them filed in the proper order. The hope in submitting the IRS forms is that you can avoid hours lost on hold with the IRS and prevent fraudulent filings that create stress during any already stressful time after a loved one has died.

Ultimately, whether you are having to deal with identity theft or fraud involving the IRS at a personal level or as an executor, you should consider speaking with a tax professional, such as a CPA or an attorney.