The “IRS Investigations” Scam

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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…

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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.

Stephen Olsen About Stephen Olsen

Stephen J. Olsen’s practice includes tax planning and controversy matters for individuals, businesses and exempt entities for the law firm Gawthrop Greenwood, PC.

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Comments

  1. I ran the Cardozo School of Law Tax Clinic for over 10 years. And, like Keith, with regularity, I dealt with individuals who came to my clinic after having had a bad experience with some Offer In Compromise companies. But, I never felt that I had enough information to judge whether these companies were all simply fraudsters. In some cases, the companies had submitted OICs, but the information on it was incomplete or incorrect, so it not surprisingly failed IRS review. I think some of this may have been because my clients accidentally gave incorrect information or left out something in speaking to the companies. Certainly, the companies could not have been in business profitably if they had to repeatedly ask for information and documents from clients like my students and I often did with our clients. I want to be charitable to the companies. Clearly, a company that takes money to prepare an OIC and then doesn’t prepare one is crooked. But, when an OIC does get prepared and then is rejected, I am not sure where the fault lay — with the company, with the client, or with both.

    • Carl, I completely agree. I was probably too broad in my language. I do not know what percentage of those folks are crooks. And, in practice even with paying clients, a large percentage are not good at collecting and disclosing, which results in various problems.

      • Robert Daniels says

        Stephen, Carl: I have often wondered how some of these companies are allowed by law to out and out lie to potential customers by saying things like “If you are delingquent or negligent on your Federal Taxes you better look out The IRS is cracking down on individuals and they will garnish you paycheck and can take everything you own, your house, your car, even your furniture and they will. But, good news folks because there is a new plan out by the IRS called “Tax Amnesty” and you can now take advantage of that and reduce your tax bill up to 50%, 60% up to 85% but call now this plan will not last long. This is almost verbatim what a leading law firm is advertising using Allan Tripp as a spokesperson. I am not a Tax attorney but I work for the U. S. Tax Court and it just amazes me that they are allowed to exagerate and out right lie about the this?

        • Allan, It bothers me greatly, too. There is partial truth in these ads — the IRS can levy on wages and cars — and huge additional exaggerations (and a few lies). But, since you aren’t a lawyer, the problem is a tradeoff of the First Amendment and the way it is interpreted by the Supreme Court, which treats commercial speech as protected by the 1st Amendment, so prior restraint is not permitted. Thus, the TV stations and don’t pre-review ads for accuracy. The IRS only goes to court to get an injunction issued after these ads have been shown for some time.

          The good news is that lots of these injunctions are being successfully brought each year. They fill the district courts. But, the bad news is that there will never be enough injunctions.

          To me, even worse than these companies — who can be found — are the small, local return preparers setting up shop for a single year, usually in a poor immigrant community that doesn’t know U.S. taxes at all, and who generate lots of false refunds, then disappearing the next year — often after writing “self-prepared” on the bottom of the return, so the preparers can never be traced. At least the people with the TV ads can be found and fined, enjoined, and/or prosecuted.

  2. Offshore Voluntary Disclosure Initiative, FWIW.

  3. It’s curious how this Mr. Jones discovered that your client had a previous IRS issue. Just a couple of months ago one of my clients called to tell me about a very disturbing call she just received. The “IRS representative” was very threatening to her, and wanted a payment quickly. As she already had an installment agreement in effect, the client called me and gave me the caller’s phone number. I called the man, and he did not answer with any sort of official title. Once I parsed through his heavy African accent, I suggested he was not with the IRS, or he would have called me first. This scammer threatened to kill me unless I hung up. Of course I called TIGTA and they were more than interested to hear it all. Soon thereafter I saw a notice to the public warning about this latest trick on the IRS website.

    • Thanks for the comment, Jeff. Interestingly, the person who called my client also had a very heavy accent, to the point where my client asked him if he was calling from outside the United States.

  4. Mary singer says

    Just got 2 calls this past weekend at a home I rent at the beach. The number was 202-506-8085, they were from the IRS investigational unit. I called and they asked if I had a lawyer and there was a miscalculation on my 2010,2011 taxes and they tried to deliver paperwork and no one was home. They said I owed 7234.56 . I told them there was an error and I would call the IRS , they hung up with me. On a whole other note getting calls from Megamillions that from a fedex office in Ohio that they have 2.5 million check and a Mercedes , all I have to do is pay for insurance, go to walgreens and buy a green dot card. Evidently they get people to do this and these people give them money. The sad thing is with this , by accident he gave me his number, 601-879-4847 it was from a small town in Mississippi , I called the local non emergency police who gave me the number of the attorney general, I called and they could care less. They told me they have been trying for years to stop them and they just tell people to hang up. I was so mad that our government does not care that these scammers are stealing money from people. They know they will get away with it so now in 2 weeks I have 2 calling me, at least with emails you just delete. If anyone reading this knows of any law enforcement agency that cares, please share these numbers and put these thieves in jail!

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